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ENVIRONMENT-PERU: Congress to Investigate Amazon Pipeline

Ángel Páez

LIMA, Mar 1 2006 (IPS) - The Peruvian Congress will investigate the star project of foreign investors in Peru: the Camisea pipeline that carries natural gas from the heart of the Amazon jungle to the Pacific coast, built at a cost of 1.6 billion dollars.

The chairman of Peru’s congressional Environment Committee, Walter Alejos Calderón, announced that he would ask Minister of Energy and Mines Glodomiro Sánchez to explain to Congress why the Transportadora de Gas del Perú (TGP) consortium used pipes in poor condition that were left over from earlier projects to build the 720-km pipeline.

Congressman Juan Manuel Figueroa, who represents Cuzco, the southern Peruvian region where the Camisea gas fields are located, has joined in the call for the minister to report on what measures will be taken against TGP.

The legislators’ reactions were in response to an independent audit of the pipeline project by E-Tech International, a California-based engineering and environmental consultancy.

E-Tech presented the report to the Inter-American Development Bank (IDB), which helped finance the pipeline, during a public hearing in Washington Monday.

The report states that in its haste to meet the deadline set by the Peruvian government and thus avoid heavy fines, TGP “violated standard pipeline construction practices.”

The author of the report, engineer Carlos Salazar, worked for the Argentine firm Techint in 2003 and 2004, and is a former Camisea pipeline inspector.

Techint, along with another Argentine company Plus Petrol and the Texas-based Hunt Oil, leads the TGP consortium.

According to Salazar, Techint used pipes left over from projects in Brazil and Ecuador, which were corroded from being stored outside and suffered further damage when they were transported to Peru, to build a large part of the pipeline.

The E-Tech report states that the four leaks that occurred in the pipeline’s first 15 months of operation were a result of the poor condition of the pipes and of welding done by unskilled workers.

Salazar said the pipeline is likely to leak at six points, several of which are located in pristine tropical rainforest.

In a statement issued Tuesday, TGP rejected the findings of the report, which it said had inflamed public opinion in an irresponsible and unfounded manner.

The consortium maintained that the pipes used to build the pipeline were all new and in perfect condition, and that the workers hired were highly qualified.

It also said that the independent laboratories that investigated the pipeline ruptures reached the conclusion that the quality of the pipes and the welding had nothing to do with the leaks. However, the statement provided no explanation as to why the ruptures occurred.

“I believe there are only two options: either TGP guarantees the adequate distribution and transportation of the gas, or the work should be brought to a halt, which would be catastrophic,” Alejos Calderón told IPS.

When the latest leak occurred, in late November 2005, the Peruvian government fined TGP for 915,000 dollars, and Minister Sánchez expressed his concern over the unusual number of accidents and issued a warning about the implications that a review of the contract could have.

TGP responded with an announcement that it would invest in improvements by adding valves and installing a system to detect failures, and that it would set up stations along the pipeline to respond quickly to emergencies.

But the E-Tech report could mark the beginning of a change in the relationship between the Peruvian government and TGP.

“I am here in Cuzco, and I have been informed of a fifth rupture of the pipeline, at kilometre 157,” legislator Figueroa told IPS.

“This new incident fits in with the findings of the report presented to the IDB,” he added. “The situation is the result of the government having turned a deaf ear to our demands for an audit of the pipeline, which would supposedly be in good working condition for 20 years.”

“I believe the contract should be reviewed,” he added.

In a brief reply to IPS, however, TGP denied that a fifth rupture had taken place, and said “The pipeline transportation system is working normally.”

The Peruvian Congress planned to discuss the E-Tech report Wednesday before asking the energy minister for an explanation and launching an investigation if the government’s response was deemed inadequate, said Alejos Calderón, who did not rule out the possibility of the legislature recommending a review of the contract.

“A revision of the contract is one option, which could involve replacing pipes with new ones, or even building a new pipeline. Penalties for TGP are another possibility that could be discussed. Outright cancellation of the contract is highly unlikely, because the work has already been completed,” he explained to IPS.

But he warned that building a new pipeline would have serious consequences.

“Rebuilding the pipeline would mean eliminating everything that has been done so far, and would probably bring the production and distribution of gas to a complete halt,” he said. “There are villages and towns that already receive royalties and usage feesà.and it would mean returning to the drawing board. That’s why I believe it is necessary to find a compromise solution.”

The government estimates that 49.6 million dollars in usage fees went to the Cuzco region in 2005, the highest such fees charged in Peru. Nearly three-quarters of the population of that southern region is poor.

>From the royalties obtained from sales of gas from the Camisea field, the National Defence Fund is to receive some two billion dollars between 2004 and 2020, to modernise and upgrade Peru’s armed forces.

The E-Tech report does not delve into the impact of the natural gas spills on the local indigenous communities.

Lily La Torre, director of Racimos de Ungurahui, a non-governmental organisation that works on behalf of indigenous groups in Peru’s Amazon jungle region, commented to IPS that the report “reflects what we have always warned with respect to the effects of a project that has not been properly supervised.”

La Torre said the Peruvian government is only worried about getting the pipeline to work perfectly, and that “it does not care about the indigenous communities affected by the leaks.”

“The state should immediately review the contract with TGP,” she added. “The IDB should also intervene, pressuring the consortium to live up to Peruvian laws.”

Marlene Canales, with the Interethnic Association for Development of the Peruvian Jungle, concurred with La Torre. “We have long been calling for an environmental audit because we know that unskilled workers were employed. Today the information we had was confirmed,” she remarked to IPS.

“The state should review the contract. We have been demanding that the works be brought to a halt until an environmental audit was carried out.”

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