Peru: Camisea Gas Pipeline Inaugurated after 20 Years

NotiSur - South American Political and Economic Affairs, August 27, 2004 | Go to article overview

Peru: Camisea Gas Pipeline Inaugurated after 20 Years


Twenty years after the Camisea natural-gas fields in the Peruvian department of Cuzco were discovered, President Alejandro Toledo has inaugurated the pipeline that will bring the gas from the interior to Lima and the Pacific coast. The president and his ministers say the revenues generated by the sale and distribution of gas will be an economic windfall for Peru and will revolutionize energy consumption for the country's citizens. But as the Toledo government celebrates the pipeline opening as a historic moment in the economic life of Peru, environmental and indigenous groups say the project will do significant harm to the ecosystems it travels through and to the native peoples who live in them.

Camisea pipeline opens after two decades of conflict

In 1984, multinational oil corporation Royal Dutch/Shell discovered the Camisea gas field, which holds an estimated 13 trillion cubic feet of gas, 1,100 km southeast of Lima. The Royal Dutch/Shell Group abandoned the Camisea project in 1998 when the Peruvian authorities would not offer more control of the sale and marketing of the gas and the company quoted a high cost for electric power generation to the government (see NotiSur, 1998-07-31).

The US$1.6 billion Camisea gas project will carry gas from the Peruvian Amazon some 1,100 km across the Andes mountains to Lima and to a new liquefied natural gas (LNG) terminal on the Pacific coast. A consortium of private and state companies is running the project, led by Argentina's Pluspetrol and the Texas-based Hunt Oil. To complete and continue operating the project, US$2 billion in loans and investment financing will be necessary in the coming years.

From a modern control room in Las Malvinas, Cuzco, on Aug. 5, President Toledo ordered the opening of the valve that would bring the gas into Lima. He and his ministers celebrated the inauguration as a national triumph and a "historic moment" that would divide Peruvian history into the days before Camisea and after Camisea. The project extracts, transports, and distributes gas for domestic and, beginning in 2007, international consumption.

Toledo says Peruvians will have to convert their automobiles to use natural gas and acquire equipment to heat water and stoves with the fuel, and he encouraged citizens to help the process along. About 1,000 Lima homes will begin receiving the Camisea gas immediately, with more joining as they get the proper equipment.

Vice Minister of Industry Antonio Castillo said that about 1,000 businesses will be able to convert their production process to use gas in place of diesel. In the coming business quarter, 100 of the country's principal businesses will begin using natural gas, while 500 from the manufacturing sector will be able to begin the process of energy substitution. Officials expect that in Lima some 18,000 buses will change over to natural gas for fuel, and they hope that the conversion will help alleviate the notorious smog in the city of eight million people.

Human and ecological cost

On the occasion of the inauguration, Joel Merino, a representative of 52 Ashaninka communities from the neighboring region of Ucayali, said the work of the consortium had driven away the fish and animals that allow those communities to live. Merino said the native people expected to be compensated "in some way" in addition to the health, education, and communications works that have already been brought in by the international consortium.

Leaked reports by the Health Ministry said that the Camisea project was killing native peoples, spilling diesel, and leaving waste dumps, as well as causing large-scale deforestation (see NotiSur, 2004-04-16). Nongovernmental organizations (NGOs) like Oxfam, Amazon Watch, the World Wildlife Fund (WWF), the Nature Conservancy, and several Peruvian environmental and indigenous groups have attempted to use reports like these to block Inter-American Development Bank (IDB) loans to the Camisea gas project. …

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