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Loans to Hunt Oil’s Peruvian Fossil Fuel Project Challenged
Under World Bank rules, loans are not permitted to projects whose “associated facilities” breach the Bank’s environmental and social safeguardsWashington D.C.—The World Bank, Inter-American Development Bank (IDB) and U.S. Export-Import Bank (Ex-Im) would be breaching their own social and environmental safeguards if they approve more than $1 billion in public financing to a controversial gas project in the Peruvian Amazon, a delegation of environmental, political and indigenous leaders from Peru warned during a press briefing on Wed., Dec. 12.
Spearheaded by Texas-based Hunt Oil, the Camisea project has caused widely-documented destruction of an area of rainforest regarded by the Smithsonian Institution as a world biodiversity hotspot. The project has also had negative adverse health and social impacts on thousands of indigenous peoples, including the Machiguenga, Yine, Nanti, and Nahua peoples. The latter two are some of the last still living a traditional isolated lifestyle anywhere in the Amazon basin.
Three of the first phase of Camisea’s planned five well sites are located in the Kugapakori-Nahua State Reserve, created to protect those isolated indigenous peoples. One of those three drilling platforms has already been constructed and the other two are under construction.
Those well sites and associated pipeline and access roads are the subject of a petition for precautionary measures currently before the Inter-American Commission on Human Rights. If the Commission rules in favor, the Camisea upstream consortium could be forced to pull out of the Reserve. The second upstream phase of Camisea is now expanding into new areas of virgin rainforest, inhabited by isolated indigenous peoples. Their survival is at risk given their lack of immunity to diseases brought into the remote region by Camisea workers.
“Any foreign investment in Peru needs to be for the benefit of the Peruvian people,” said Ms. Ramos, who chairs the Peruvian Congress’s Commission for Andean and Amazonian Indigenous and Afro-Peruvian Peoples, Environment and Ecology. “So far, Camisea has had very negative impacts for local communities. The Peruvian state is failing to provide regulation and good governance and the Banks need to know this.” (Ed. Note: Ms. Ramos' remarks, and others in this article, were prepared statements to the press.)
Walter Kategari, Chief of COMARU, the representative organization of the indigenous Machiguenga communities of the Lower Urubamba, the area where Camisea’s upstream facilities are located, said: “Camisea has caused terrible suffering to my people. This project is supposed to benefit the Peruvian people yet the Machiguenga still don’t have electricity, even as our way of life has been turned on its head; the fish in the rivers that we used to eat are gone and our water is contaminated. We call on the Banks to do the right thing.”
Peru’s College of Engineers is also concerned that Camisea is being developed to service export markets rather than meet the needs of Peru’s growing internal gas market, potentially harming the country’s development. According to an independent audit commissioned from consultancy Germanischer Llloyd by the Peruvian government, a pipeline carrying the Camisea gas across the Andes, was improperly installed, making it more likely that it would leak into highly sensitive ecosystems.
The IDB and Ex-Im are expected to make their decision regarding the loans to build a liquefaction plant on the Pacific coast to allow the export of Camisea’s gas in late December. The World Bank’s International Finance Corporation (IFC) will announce its decision in mid January.
Its critics allege that, since it broke ground in 2001, Camisea has constantly been in breach of best industry practices, including the upstream consortium’s failure to provide adequate impact assessments for local communities and their precious rainforest habitat. Under the 1989 Pelosi Amendment, the U.S. Executive Directors of both the IFC and IDB should be unable to vote in favor of the Camisea loans, as the two banks have not published any impact assessment reports regarding Camisea’s upstream operations.
Another of the key points at issue for the World Bank will be whether it regards Camisea’s upstream component—drilling in the Peruvian Amazon in concessions known as blocks 88 and 56—as “associated facilities” of the liquefaction terminal. Under World Bank rules, loans are not permitted to projects whose “associated facilities” breach the Bank’s environmental and social safeguards. Currently, the only gas slated to pass through the terminal would come from Camisea.
In addition to breaching the bank’s own policies, funding for Camisea would also represent a backwards step for the environment, further investing in the hydrocarbon market at a time when climate change makes it imperative for developed and developing nations to move to clean energy technologies. Camisea would also encourage deforestation, which accounts for roughly one-fifth of global greenhouse gas emissions, but it is not addressed in the Kyoto Protocol. According to the IDB’s own calculations, the LNG project will produce 1.1 million tonnes of carbon dioxide per year.
A wave of new oil concessions issued by the Peruvian government over the last couple of years now covers some 70 percent of the Peruvian Amazon.Camisea appears to be setting a precedent for the Peruvian Amazon, one of the largest surviving areas of primary tropical rainforest anywhere in the world. A wave of new oil concessions issued by the Peruvian government over the last couple of years now covers some 70 percent of the Peruvian Amazon, despite the protests of AIDESEP and others. The Garcia administration has been widely criticized for attempts to dismantle indigenous and environmental protection laws and institutions.
Environmental and human rights groups warn that the mistakes of Camisea, including major social, cultural, and health impacts on local communities, and forced contacts with isolated indigenous peoples are likely to be repeated in the new concessions.
These violations, they say, are now likely to be repeated given the recent ratification of a Free Trade Agreement between Peru and the US, which will further open up the Peruvian Amazon to the extractive industries.
For background information on Camisea, see: camiseaII_sept2007_web.pdf
For a map of oil concessions in the Peruvian Amazon, visit: amazonwatch.org/amazon/PE/
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This story was published on December 12, 2007.