Camisea scrutiny

Sept. 22, 2003
Environmentalists and lawmakers criticized the White House for staying on the sidelines when multilateral bankers approved public financing for a portion of Peru's $1.6 billion Camisea project.

Environmentalists and lawmakers criticized the White House for staying on the sidelines when multilateral bankers approved public financing for a portion of Peru's $1.6 billion Camisea project.

Citing environmental reasons, the US Export-Import Bank Aug. 28 rejected $214 million in financing for the massive natural gas development within the Peruvian rainforest. But the US later abstained from a Sept. 10 vote by the Inter-American Development Bank (IDB) to provide $135 million for the transportation section of the proposal (OGJ, Sept. 15, 2003, p. 37).

IDB is the largest source of multilateral financing for Central America and the Caribbean. It is owned by 46 member countries: 26 borrowing member countries in Latin America and the Caribbean, and 20 nonborrowing countries, including the US, Japan, Canada, 16 European countries, and Israel. IDB says Camisea gas can be developed and shipped without damaging fragile ecosystems.

Criticisms

But given that the US holds the greatest influence within IDB with 30% of the vote, it should have opposed financing, Camisea critics said. "The US government announced its decision to abstain from a positive vote, yet without a clear 'no' vote from the US, other voting members felt there was consensus to approve the project," noted Amy Gray of Bank Information Center, a Washington, DC-based watchdog group. US House Minority Leader Nancy Pelosi (D-Calif.) argued that the US's action violated the intent of a law she helped write.

The Pelosi amendment, enacted as part of the International Development and Finance Act of 1989, prevents the IDB's US executive director from voting to approve any project that would have "significant" impact on the environment unless an environmental assessment is made publicly available.

Conditions, considerations

IDB defended its decision, pointing to the Peru's decision to create a commission "to restore and enhance" environmental conditions within Paracas Bay and surrounding areas. The bank stressed financing will be conditioned on environmental monitoring and supervision of both the upstream and downstream (transportation) components of the project. But that is not enough for environmentalists and their congressional advocates, which include Pelosi in the House and Patrick Leahy (D-Vt.) in the Senate.

Pelosi urged Peru and project sponsors to immediately implement stronger environmental and social safeguards. This includes moving the proposed gas processing plant farther away from the Paracas National Reserve. Project managers, meanwhile, do not anticipate having to change the plant location, although new environmental controls could add as much as $400 million to Camisea's development costs.

Environmentalists warn if votes such as this one happen again, the US Congress may be reluctant to replenish the US's share of the IDB budget in the next 2-3 years. Yet even environmentalists concede few lawmakers may be unhappy about Camisea if US natural gas prices stay as robust as some analysts predict.

The project is expected to be on line by August 2004, and about half of Camisea's estimated 11 tcf is slated for the US West Coast.