Camisea project's IDB loan remains on hold; Ex-Im Bank declines loan guarantee
By an OGJ correspondent
LIMA, Aug. 28 -- The Inter-American Development Bank (IDB) has postponed for a third time a decision to provide a $75 million loan to be used towards the completion of the pipeline portion of the $1.6 billion Camisea natural gas megaproject in Peru's Amazon rainforest.
Meanwhile, the Export-Import Bank of the US (Ex-Im Bank) denied an application for a $200 million loan guarantee to support US exports for the Camisea natural gas project.
Camisea involves upstream and downstream portions to develop and transport to market 13 tcf of gas, stands 68% completed (OGJ Online, Aug. 4, 2003).
Pluspetrol Peru Corp. SA, operator of the upstream portion of the project on the eastern slopes of the Andes, announced that initial site work also has begun at Pisco on the southern coast for the construction of the project's 50,000 b/d NGL fractionation plant.
Work on the offshore installations, including construction of a subsea pipeline and cargo terminal, remain on hold for final approval of the environmental impact assessment for the offshore zone (OGJ Online, June 9, 2003).
The IDB loan would be required to complete final gas routes that extend from Camisea, 500 km east of Lima, to Lurin, south of the city. The loan is set to be discussed again Sept. 10, according to the latest postponement announcement, although Roberto Dañino, Peru's ambassador to the US, was pressing for a Sept. 3 deadline, which would be 30 days following the previous meeting on the loan.
Peru's Banco de Credito, Apoyo Consultores, and Westfields also expect by December to put together a syndicated issue of 9-year bonds valued at $225 million.
Reason for IDB delay
The main delay in obtaining IDB financing is attributed to strong opposition from nongovernmental organizations against potential impact to the environment and the indigenous communities.
Pluspetrol's construction of a fractionation plant in Pisco, neighboring the Paracas reserve, is currently causing strong opposition. Construction of the plant and installations, however, is already 40% completed, after receiving a license in April. Pluspetrol also is preparing to begin installation of subsea lines off the coast to be used for shipping; these were approved in July.
Cost of construction of the fractionation plant and associated lines is estimated at $140 million, although expenses may increase through additional monitoring installations.
Meanwhile, at Malvinas, Pluspetrol has completed the drilling of five development gas wells in the San Martin I fields and is preparing to drill another three in San Martin III.
Ex-Im Bank decision
The Ex-Im board voted 2-1 against the loan guarantee.
"This decision is situation specific and does not reflect the bank's overall interest in financing US exports for energy projects throughout the world," said Ex-Im Chairman Philip Merrill.
In an interview with Reuters, Peru's Economic Minister Jaime Quijandria said the project was still on track despite the Ex-Im Bank decision.
The Ex-Im Bank export credit would have enabled the project to import US equipment. But now, Camisea will import German and Italian equipment, to make up that part of the financing, he told Reuters.
Camisea partners respond
The joint venture parnters responded to Ex-Im Bank's decision in a press release issued Friday saying that they were "disappointed" with the bank's decision.
"Despite this decision, the Camisea consortium reiterates its strong commitment to complete this project, of great national importance for Peru, by August 2004," the parnters said.
"The Camisea consortium will continue to work with the government of Peru and other stakeholders to assure that the project meets the high standards that the people of Peru expect and deserve."