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The Last Commons: Drilling in the Peruvian Amazon


[clock] 2-MINUTE READ ISSUE:  Fall 2007
Young Girl Cradling Parrot
(Atossa Soltani)

“We wait until the sun comes up,” Alcides said.

“Ivochote?”

“Across the bridge. There. Better to sleep now.”

At daybreak we got our bags and walked with the natives toward the sound of the river. They were Machiguenga mostly. A few peasant colonists, mestizos, sleepily blinking, carrying sacks, pushing wheelbarrows. We made a wet, muddy, pitiful procession. On all sides, the jungle canopy slumped under the rain.

“Ivochote!” yelled Alcides.

I saw the top of the bridge, then below it the Urubamba River, rain-charged and tumbling out of the Andes. Ivochote itself was a mere trace in the mist but plenty visible to seem dismal. We crossed the bridge and went down the rock bank to wash off the mud. Ivochote was like most Amazonian supply towns: edgy, filthy, on the verge. A mudslide the day before had blocked the road, but this didn’t bother Alcides Huinchompi, my guide, who was built like a fullback. He took off his boots, rolled his jeans, and said something in Machiguenga that made the women give the babies to the men.

Alcides is treasurer of the Machiguenga Council of the Urubamba River (COMARU in Spanish), a native organization backed by international aid groups like Oxfam. Alcides spends his days on buses, motorcycles, and boats traveling through the Upper Urubamba, crossing by boat into the roadless regions of the Lower Urubamba. “I help my people organize and defend their rights against oil companies,” he told me. He talked in Spanish mostly, switching occasionally to Machiguenga. He told the natives I was a reporter, that I had “come to tell the truth” about Camisea—a $1.6 billion tangle of gas wells, processing plants, and two high-pressure pipelines (one for dry gas, the other for natural gas liquids) which has effectively bisected previously seamless basal forests that sit, sadly, atop one of South America’s biggest reserves of natural gas in Peru’s Lower Urubamba Basin. Where we were headed.

Foreign Exchange: Peru’s Petroleum Play

Also available for the iPod/iPhone.

For four hours, it rained through the mist. We waited on the boat and watched a Jackie Chan movie dubbed into Spanish and ate with slurps and elbows. Mystery meat. Watery chicken. Everything smelled of piss and grease. We watched the boats whine against the current, bank, and pull into the rocks while the natives threw themselves, bags, potatoes, rice, everything in. One tried wrestling a squealing pig into the boat. Everybody stopped for a minute, laughing. The river was rising, logs twisting. The motorista yanked the cord and the motor shook and belched a plume of cotton smoke that swirled, hung, then loosened into the downriver wind. He started yelling for everybody.

A kid in his early twenties sat down with us, and Alcides poured him a beer. He was Machiguenga with a buzz cut, wearing a golf shirt and khaki pants. His skin was a smooth, deep brown like a grandfather’s catcher’s mitt. Alcides introduced him as the “chief” of some village I had never heard of and could not, later, remember. He had been to Quillabamba to attend a meeting about the oil companies. I asked him where his village was. He smiled and swung his hand out toward the jungle like he was shooing a mosquito or waving off a stupid joke. “Muy lejos.” Very far.

“There was an explosion,” the kid said.

“Yes,” I said. “I heard about it.”

He took a drink of beer and looked out at the river and the bridge and Indians coming across it.

“Camisea is dangerous?”

I said that I had no idea.

*  *  *  *  

Boat on River
A canoe makes its way up a small tributary of the Urubamba River toward the village of Porotobango (www.loneoutpost.com).

From a boat, the jungle passes like a looping tapestry of green: macaws explode from riverside clay licks; monkeys jiggle branches. Then, unexpectedly jutting from its banks is Malvinas, a giant natural-gas plant. Across the river, you see only piers, trucks, bulldozers, and barges stacked with mile upon mile of steel pipes. Malvinas is part of the Camisea Gas Project.

Backed by a group of international companies led by Hunt Oil of the United States and Argentina’s Pluspetrol, Camisea is touted as—and has been—a job-creating development engine for Peru. The Washington-based Inter-American Development Bank (IDB), which uses US-taxpayer-backed loans to lift the economic and social standards of development projects, put $75 million into the project in 2003. So far, Camisea has meant a mint for companies and a cash cow for the Peruvian government—which wants more wells, more pipelines.

But in December 2004, just four months after its completion, the liquids pipeline ruptured. And again and again—a total of six times in the first three years of service (one in March 2006 sparked an explosion that burned trees, killed domestic animals, and left two natives severely burned). The companies backing Camisea blame unstable soil, say repairs have been made and that the pipeline is good to go. Critics, including some of Peru’s most prestigious engineers, suggest serious design problems; they say the pipeline has already spilled more than 200,000 gallons of pollutants into one of the world’s most pristine rainforests and is poised to dump much more.

Meanwhile, Hunt Oil is asking the IDB for another $400 million for a second-phase project. Hunt plans for “Camisea II,” a $2.8 billion export venture for Peru’s natural gas, which means more wells, more pipelines, and a billion-dollar liquefaction plant built on Peru’s only maritime reserve, near Pisco. The project—Peru’s largest-ever foreign investment—was officially launched in January. But as backers court investors for Camisea II, worrisome questions remain.

*  *  *  *  

The Lower Urubamba Region—LUR, as Smithsonian biologists called it when they assessed the region for Shell Oil in the 1990s—contains the Amazon’s highest concentrations of biodiversity. The researchers described a region with “extraordinary biodiversity” that was virtually untouched by human activity. Though the Camisea Gas Project has changed that to a degree, most of the LUR remains pristine. Virginal. Otherworldly remote. Even today, fewer than 15,000 natives and peasant settlers are thought to live there—many of whom may never have been in contact with modernity.

Four thousand Shell Oil employees first came to the LUR in the 1980s and spread out through “a purely indigenous zone,” said Lelis Riveras, a hulking, one-eyed mestizo whose nonprofit group, the Center for the Development of Indigenous Amazon Peoples (CEDIA), is the closest thing the LUR natives have ever had to a government. In his office in Lima, he told me how Shell workers laid thousands of miles of seismic lines—strips of explosive caps whose massive blasts give geologists an acoustic look at what’s below—to discover 13 trillion cubic feet of natural gas and liquids. Shell left the Urubamba, returned again in the 1990s, but ultimately abandoned exploration in Peru after failing to win backroom political support. Later, a group of “small” oil companies such as Hunt, led by Argentina’s Pluspetrol, won what Shell could not and, in the early 2000s, came into the LUR like gangbusters.

Riveras said Shell taught the natives how to view the region’s intruders. “Shell respected nothing,” he told me. He said that workers were arrogant, introduced new diseases, and caused an environmental mess. They “also left behind the impact of rape and sexual relations with indigenous women who became pregnant and had children who are now called Shell Children.” The company didn’t compensate for shacks it destroyed to build heliports or camps. Nor did it ask permission. Lessons were learned. “We decided to help the natives defend themselves against people who came to trample on their rights,” he said. When Shell returned in the 1990s, they found a new type of native, the kind who blocked representatives, demanded protocols, and refused unannounced meetings.

Years later, Argentina’s Pluspetrol entered the area with the Camisea Gas Project. They promised development, jobs, a better life, and they wisely distinguished themselves from Shell. Pluspetrol, Riveras said, managed to build a modicum of respect. But the pipeline problems have set things off again, and relations are rapidly deteriorating.

*  *  *  *  

We were on the river for hours, what seemed like days.

Freddy Veras’s boat was a long, banana-shaped job made for cargo, over fifty feet long, four wide. No seats. No cover. A 75-horsepower outboard. Veras, a Machiguenga with a beer belly and fungal toenails, makes a living running goods and people up and down the Urubamba River. They say he’s one of only a dozen motoristas who can cross a roiling whitewater called the Pongo de Manique with a loaded cargo boat, and he will take anything that will half sit still: pregnant wives, beer, drugged mules, students, missionaries, solar panels, batteries, more beer. Camisea has meant cash for poor natives living deep inside the jungle, and cash for poor natives has meant customers for Freddy. At noon he loaded us up—a half-dozen natives, including two babies, and me, plus 500 quarts of beer covered in black plastic. The ride started at Ivochote and stayed chilly and wet in the mountains, rain slanting, natives huddled and shivering under sheets of plastic. But not a word of complaint. They were Machiguenga with small frames and high cheekbones, and they could go hours without speaking. Once we descended out of the Andes into the forest, the sun pounded us. Occasionally Freddy cut the engine and whistled. Natives would appear at the riverbank, in twos, threes. They pulled the boat in and the beer was offloaded. The men wore filthy T-shirts—logos of Repsol, Pluspetrol, Camisea. Some had caps pulled low over their ears. Most were barefoot or wore sandals cut from tire rubber.

We got to the village of Camisea the next day. A Machiguenga settlement of 400 or so at the confluence of the Camisea and Urubamba rivers, it is little more than a few yards of clearing in the jungle. On a point jutting over the river a kid sat in a wooden kiosk, as though manning a ticket booth at a county fair. He was counting the Camisea company boats and barges—part of a monitoring program set up by Pluspetrol. There wooden shacks and filthy chickens in the dust. There was scorching sun. Women, dressed in the Machiguenga’s traditional cushma, sat in huts weaving on a handloom while kids with dirty noses played or fished in the river. We got out. Three men walked up to Alcides and gave him a limp handshake. Alcides said something that made them turn and look at me. They laughed and pulled out the beer.

I asked if I could see the mayor. They pointed to a building with a large antenna on the far end of the village. There, Matías Ríos, el jefe, was sitting in a chair beside a two-way radio, his head shaking back and forth in his hands. The voice on the other end seemed to be shouting; he said something, hung up the mike, and I introduced myself. At first, he was suspicious, but he led me to what seemed to be a community hut. After a quart of beer, he loosened up and started talking.

Sign
A sign on the banks of the river reads: ”Welcome to Camisea. No Littering. We are a clean community” (www.loneoutpost.com).

Ríos said the “compensation” promised by the Camisea oil companies is more talk than reality. He ticked off what he claims were promises made and broken: running water in every house. Nada. A school building for teachers. Nada. Teachers themselves. Nada. And then there were the spills. The broken pipelines, he said, had made a mess of everything. He put his beer down, went to the door and yelled something. Two shirtless boys in filthy shorts and buzz cuts ran up. He said something in Machiguenga, and one kid pointed at his bellybutton, to a sore lined with pus. He and the other kid had other spots, too. Rashes. “The river water,” Ríos said, shaking his head. “The company sent men to test it. They said nothing was wrong with the water.” When I asked him if the government could help, he laughed. He said the man who had been yelling in the radio was a government official inviting him to a meeting to talk about what to do. “He did not have gas. He asked me to bring him gas. That is the government here.”

*  *  *  *  

The Inter-American Development Bank is supposed to stimulate progress while protecting natives and the environment in places and cases where national governments are too weak or corrupt to do so. In 2003, bank officials sided with the Camisea companies and in defiance of the recommendations from environmental groups and the United States Agency for International Development (USAID) that US officials oppose the Camisea loan on environmental grounds. For those very reasons, the Export-Import Bank (the official export credit agency of the US government) and two private banks already had refused to back it. The US representative to the IDB abstained from the vote at the time, citing environmental concerns. But critics note that the US did not oppose the loan and point out that the CEO of Hunt Oil, Ray Hunt, is on the board of Halliburton and one of President Bush’s “Pioneer” contributors. They say the IDB has failed to police Camisea. Others say the IDB jumped on a moving train and could only do so much on a project that it didn’t shape from the beginning.

Sandra Martínez is the thin, middle-aged representative of Pluspetrol’s social and economic programs in the Lower Urubamba region. She seems to always be hurrying, assistants scurrying along in her wake. She told me that Camisea has contributed to development in the Lower Urubamba. She said it’s done a good job providing social services that the Peruvian government does not. When I spoke to Robert Montgomery, the head of IDB’s private investments in 2006, he told me the same: the IDB had undoubtedly improved the region. And yet there are signs that those assessments differ from the views of US officials who control the bank’s US disbursements. In a Senate Foreign Relations Subcommittee hearing on multilateral development banks last year, Clay Lowery, Acting Under Secretary for International Affairs in the US Department of Treasury, called Camisea “a failure” that “could have been designed better.” Of Camisea II, he said the Treasury “had not made up its mind.”

Undoubtedly, the six native communities in the project’s “area of influence” have seen some benefits. When things go well, they can go very well. For example, Shivankoreni, a fishing village on the Camisea River, is known for having managed its money carefully. The village’s older generation doesn’t speak Spanish; they grew up hunting monkeys and rodents with bows and arrows. Now, Shivonkoreni has used parts of a promised payoff of $300,000 to finance numerous modern amenities.

Inside the one-story wooden community center, I found a large-screen color television. A generator and solar panels saves up energy so that at night the community can get together and enjoy Peruvian soap operas or soccer games. During my second visit to the village, earlier this year, there was a new concrete bridge crossing a swamp, and a small cinderblock building with two flush-toilets and a shower. Workmen had boated in concrete from Ivochote for the foundation of an internet center and while I was there a team of technicians had come to install fifteen computers with satellite internet connections and educational software. The village has also created a few scholarships for village kids to study electrical engineering in Lima.

Despite these modern amenities, villagers in Shivonkoreni told me things on the whole had deteriorated: fishing was harder, hunting was harder, bad vibes. Alcides told me the Machiguenga were losing their culture amid all the convenience—wearing, for example, T-shirts instead of cushmas. (He lamented this even as he himself wore modern clothes.) And there was the drinking. On my 2006 visit, I saw people drinking in the afternoon. This time, the mayor and a few others had emptied several quart bottles by 7:30 in the morning. One Washington-based human rights activist who knows Shivonkoreni well is concerned. “Years ago they would get drunk at parties,” he said. “Now it’s all the time.” Nearly every expert or outsider acknowledges the alcohol problem. Sandra Martínez says that Pluspetrol is working with a group of psychologists on the problem. “There is not much to do there,” a doctor in Camisea told me. “They drink.”

*  *  *  *  

If natives don’t want to exchange tradition for progress, can they say no to oil companies?

I asked Martínez. “Peru is a signatory country of the International Labor Organization’s Convention 169, which proposes the process of prior consultation,” she said. “But the process of prior consultation has to do with consulting and letting the population know of the project, but not with the possibility of rejection by the population.” Riveras agreed. “When oil companies and natives disagree, the state ensures that the companies get through,” he told me. An Oxfam representative said a national Peruvian law grants the state power to seize control of a community to give oil companies access.

Lily la Torre, an attractive middle-aged attorney who runs the rights group Racimos de Ungurahui, said she is going after companies that try to cross into government-protected indigenous parks where natives are living in voluntary isolation. I met with her in her Lima home. She told me the story of remote settlements contacted by workers who crossed what were supposed to be state-protected boundaries of indigenous reserves. A 2006 report issued by the Defensoría del Pueblo, a Peruvian government agency, reported that between 2001 and 2003 the worker’s contact had caused an influenza epidemic, killing seventeen natives. She has been working to exempt government-protected reserves from business concessions. She says more and more state reserves are overlapping with oil concessions. “There are isolated indigenous populations whose life depends on not having their territory intervened,” she said. “The government has the constitutional responsibility to protect them.”

In February 2007, she and ten leaders from Amazonian tribes flew to an oil industry conference in Houston, where Peru’s state oil company, Perupetro, was tendering 22 million acres of intact rainforest. Accompanied by groups including California’s Amazon Watch, a small but influential activist organization, la Torre told oil companies attending the conference that Peruvian officials hadn’t fully disclosed the facts. “We told them that seven of the blocks were superimposed on isolated indigenous territories,” she said. “And we told them to expect problems, because there they were going to come across people that would reject them and get into altercations with their workers.”

It wasn’t her first go at hardball. She said a Chinese company recently came to her after discovering that its new concession in the oil-rich zone of Madre de Dios crossed into a reserve. “We told them they could cause genocide if they went into that area. We told them to expect problems.” She put the company on notice that she would use national and international law to bring cases of genocide against it and the Peruvian government. And there are signs that her tactics are succeeding. Peru’s Ministry of Energy and Mines (MEM) has since promised to pull some concessions that overlap with isolated communities.

Pluspetrol’s Sandra Martínez said oil companies have a “social responsibility” to get a “social license” from natives. A cynic might say companies seek licenses out of a “logistical necessity.” Jungle work is hard, and an angry, armed native can make it impossible. In the Ecuadorian and Peruvian Amazon, places where the oil and gas boom is most intense, rights groups report how companies go about getting these “social contracts.” They arrive, often in awe-inspiring helicopters, often with government officials, offering the modern equivalent of beads and mirrors while announcing their state-granted rights to lay mysterious things called “seismic lines” across territories.

Remote, pre-industrial people sealed in a rainforests have no mass media to inform them about Big Oil’s unintended consequences. Gregor MacLennan of Shinai, an internationally funded, Peru-based indigenous-rights group working on Amazonian development problems, put it this way: “Natives can imagine things like satellite television and oil jobs, but they have a harder time imaging things like pollution, erosion, prostitution, and alcoholism.” Companies often talk up the benefits, and, with no one to tell them otherwise, natives often take what’s offered.

In the Urubamba, news of Camisea’s problems has spread, so companies and their opponents are racing for hearts and minds. I arrived in Shivonkoreni in 2006 on the same day as a Pluspetrol community representative, a clipboard-carrying assistant wearing a Manpower Temporary Services shirt, and a cameraman who was filming a half-dozen or so native women weaving palm beside a company-funded reforestation plot. I asked her why she was filming. She said it was to show to investors. I pressed her. Was it to show other native settlements considering social licenses? She conceded: that, too.

To counter company propaganda, Shinai uses a documentary made about the Achuar—a tribe in northern Peru and southern Ecuador that has been dealing with Big Oil for years. Known for being more aggressive than the Machiguenga, the Achuar used shotguns to take over several oil wells on their territory last October and in August the Achuar political federation known as FECONACO issued a resolution that they were going to oppose by whatever means necessary thirty-nine oil wells being planned for their territory in 2007. One group of Achuar has fought to keep an oil company off a legal concession for ten years, according to Shinai.

It’s easy to see why. Some Achuar communities along the Corrientes River have dangerously high levels of lead in their blood. It is believed that Occidental Petroleum, a US company that worked in the area for nearly thirty years, saved money by dumping millions of gallons of toxic wastewater into rivers instead of reinjecting it back into the ground. (This summer, with the help of US lawyers, several Achuar initiated a lawsuit against Occidental.) It is that sort of sad history that groups like Shinai want to show natives facing oil and gas intruders. “We dubbed the documentary into Machiguenga and show it to people from the Lower Urubamba who are starting to talk to oil companies,” MacLennan told me. The group also helps villagers make GPS-based maps to use in land disputes. One community they recently worked with—an extremely isolated family clan called Porotobango—is just starting to face off with the Spanish company Repsol.

*  *  *  *  

Porotobango is the official name of a legally recognized community on state maps. In reality it’s little more than a riverside clearing a six-hour canoe ride up from the mouth of the Huitricaya River, a shallow tributary of the Urubamba. Founded by two Machiguenga brothers and their wives some twenty years ago, the village has grown to about seventy-five people. They live in half a dozen wooden huts on a cleared strip of land alongside the river. One hut contains a few nearly empty shelves of “Western medicine.” Their only means of communication is a two-band radio provided by Pluspetrol in 2004. Around sunrise, villagers emerge from huts, jarred awake by a cacophony of animal cries. They stir pots and shush chickens. There is no electricity. They live off monkeys, rodents, and macaws killed with arrows or maybe a single-barrel twelve-gauge shotgun. When they boat to the mouth of the river to get it, they have packages of spaghetti. To catch fish, they use “modern nets” with bullet-size metal weights that they throw and pull in with a string. They drink “natural beer” made from the yucca plant. Most wear modern clothes—filthy T-shirts, shorts. They hunt in black knee-high rubber boots, creeping around the forest, peeking up into trees, quietly slapping mosquitoes. Some women wear cushmas. Some things, such as the metal pots, are items they’ve bought by selling cocoa picked in the jungle and taken to the mouth of the river by canoe. I went monkey-hunting with a boy armed with two cane arrows. The tip of his weapon was the broken-off blade of a steak knife that looked like it could have come from Wal-Mart, tied on with homespun string.

More and more, they complain about what’s happening.

People Read a Map
Machiguenga gather around a GPS-based map provided by Shinai (www.loneoutpost.com).

I sat beneath an open hut drinking yucca brew with the chief, his son (serving as my interpreter), and two others who watched my every move, as though I were a zoo animal about to do a trick. They told me that the documentary crew and I were some of the first “white faces” that had been to the village. The chief sat on the ground picking at a sore on his leg. He seemed highly disinterested in me. His eyes were bloodshot and he said nothing. I asked questions. After a bowl or two of beer, he started in, getting worked up. He told me Repsol, the Spanish oil company, had come around in a helicopter and stayed for a couple of days, telling about seismic lines and how there would be jobs and, at some point, 500 sheets of corrugated tin to stop rain from leaking into palm huts. But the boys who went off for the jobs only got paid half their promised wages. And only half the tin had arrived. At one point, they learned more about the seismic lines. He said the company had not said what they were. Or how many there were. Or where they would go. It took two mapping specialists from Shinai, who taught some villagers to use GPS transceivers, to clear up the picture of what could happen. I knew from interviewing the women from Shinai—Dora Napolitano and Carol Burda—that, back in Lima, they overlaid the data with Repsol’s seismic maps downloaded from the internet. They came back and showed Porotobango where the explosive caps were headed: ancestral burial sites, hunting grounds, fishing holes.

The next day, Alcides—who had been invited by Porotobango to speak about oil intruders—held a community meeting. The son of Gregorio Torres, Porotobango’s village leader, wore a headdress and a cushma. Everybody crowded around a schoolhouse with wooden desks and no walls. When Alcides was done and taking questions, the chief got worked up again. He was pointing in the air. Mothers shushed their kids, pulled them against dusty skirts. I got Alcides to translate. “He said he saw one of the Camisea spills and he doesn’t want that to happen here.” At one point, I asked the group what they would like to have from companies:

“A television?”

“If it breaks, who fixes it?” a woman angrily demanded.

*  *  *  *  

The same question applies to Camisea’s high-pressure liquid pipeline that funnels contaminating liquids through one of the word’s most pristine rainforests. And the answer is part of what keeps a California engineer named Bill Powers working.

If Shinai is fighting the “social and environmental” battle against Camisea, Powers is the de facto face of its “technical fight,” the standoff over the pipeline breaks and a troubling series of claims that it is dangerously designed and bound for problems. Over the last year, Powers has kept me up to speed with e-mail updates. As investors size up Camisea II, Powers is trying to get them to look past what the company is saying.

In February 2006, he showed up at the IDB headquarters in Washington, DC, with a report he co-authored with Carlos Salazar, a Peruvian welding inspector who had helped build the leaky pipe. The report accused Techint, the contractor, and TGP (Transportadora de Gas del Perú), the consortium controlling the pipeline, of rushing things to avoid a $90 million contractual late fee. The report came with photos and seemingly hard evidence that a significant portion of the pipes arrived to the field with corrosion, that uncertified welders installed them, and that radio x-rays of those welds were evaluated by unqualified personnel. “There was no independent inspection going on,” Powers said. “So corners were cut and they stayed cut.”

Powers said the reaction he got was “very strong and very negative.” IDB “insinuated it would investigate” him, and TGP said it would sue, Powers told me. But a week later, in March 2006, a section of the pipeline the report had flagged as vulnerable exploded. “That turned the situation completely around,” Powers says. “Then both the government and the bank were on the defensive and explaining why all these ruptures were occurring.” Since then, it’s been a back-and-forth game: companies rolling out test results and claims that the pipeline is fine; Powers and a prestigious group of Lima engineers chipping away at their evidence.

During Peru’s presidential elections last year, Camisea was converted into a populist litmus test. The centrist winner, Alan García, defeated his Bolivarian opponent and pledged to rework Camisea’s contracts to give Peru a better shake. Others were worked up. After the explosion, the Peruvian government and the IDB both had announced separate technical inspections of the pipeline. The Peruvian congress launched an investigation. (It would end up qualitatively backing many of the claims in Powers’s report.)

More eyebrows were raised when Peru’s prime minister, Pablo Kuczynski, a staunch supporter of Camisea, suggested the explosion might have been sabotage, that it was implausible that the break would happen exactly where Powers said it would. A Peruvian newspaper poked around and revealed a seeming conflict of interest: Kuczynski had once been a financial advisor to Ray Hunt, as well as a consultant to the IDB. Nonetheless, as Hunt Oil lobbied the Bush administration, plans for Camisea II proceeded apace back in Washington.

*  *  *  *  

The real opposition to the Camisea Gas Project is coming from below, instead of above. In February I met Carlos Salazar—the welding inspector working with Powers—at a hotel in Lima. He told me what life was like working on the pipeline: “Leave at five in the morning with a cold lunch, go to the river, catch a motorboat and head down the river to whatever kilometer we were working at that day, and there they would leave us at the river’s edge, and we would walk our way into the jungle to the line. We would meet and work all day, until 5 p.m. at the line, handling the tasks of that day. Then we would head back to the boat and to the campsites. In some cases, when we encountered heavy rains, we would not catch the boat, and instead would travel seven, eight, nine, even ten kilometers on foot, walking like that in heavy rains back to camp.” He explained what it was like to blow the whistle on a job-generating project in a country hungry for development.

He said the supervisors weren’t Peruvian and cared about nothing but deadlines. He saw scandalous excesses and neglects. “I saw pipes on the regular line when they were installed. Many times they came with deformed bevels and were installed in a hurry. It was then especially you could appreciate the magnitude of internal corrosion. Many times water remained in the pipes for some time, and this accelerated their corrosion. What happened is that no one took care with respect to this issue. No one cared.”

“I was assigned to Vinchos, near the coast. In the section of Huaytara, there was a section of pipeline from 455 to 459 kilometer that had been displaced by mistake—not by design, but by the mistake of [the supervisors] of the regular line in that section. He moved this section one hundred meters to the left and hit a gully. Thus, they moved the entire section, which was welded together, making the pipe discontinuous. Then there were pipes that had not been plated, pipes that should have been repaired—and thus created a total confusion. But no one did anything, and no one tried to solve the problem—such as look at the line and say, ‘Okay, the line is built like this, let’s see what joint needs to be repaired, what joints have we already repaired, what joints have been scratched or damaged . . .’ There was complete confusion with this section.”

For Salazar, speaking out about the mistakes took courage. “I was scared because it was dangerous. My family and I had to leave the place where we lived. We could not sleep or be happy.” His main criticism was that the designers didn’t properly regulate the thickness of the pipe. “We currently have very thin pipes in the dense jungle area. From what I know, and also what I have heard from many who worked on the project and continue to work on it, this was the greatest failure, the most crucial flaw of the project.” One expert familiar with the Camisea Gas Project told me the same thing, that the too-thin pipes were manufactured and installed by a company closely affiliated with Camisea. “I would love to know if economic decisions played into the decision about which pipes to use,” said the man who declined to be named fearing professional reprisal. In 2006, in a list of written questions sent to TGP, I asked just that question, and received no answer.

Critics say the too-thin pipes are a major issue because TGP failed to properly carry out erosion controls. TGP has blamed most of the breaks on unstable soil and played up millions of dollars spent on fixes, particularly a $7 million tunnel to protect an overly exposed section of pipe. But critics say dangers still exist, that the erosion in some cases is too severe to dial back. Critics such as Hector Gallegos, dean of the Peruvian College of Engineers, says the designers did not properly conduct soil stability tests. “Geology and soil mechanics were practically ignored,” Gallegos told me in January of 2007. He claims Hunt Oil was involved in designing the route and merely “studied” the route from the air. When I contacted them, Hunt Oil, like TGP, provided no response.

*  *  *  *  

Many say the pro-growth administration in Peru is trying to cover up the Camisea Gas Project’s problems to keep open the funding spigot for Camisea II as well as other drilling projects. As proof, they point to a dubious effort at inspection launched by MEM. After the March 2006 explosion, with reputations and investments at risk, MEM was forced to action—it set out to find a company that could inspect the controversial pipeline and say what, if anything, was wrong. Critics and industry experts noticed a suspiciously accelerated bidding process with strangely narrow timeframes. Only one small company, a Mexican subsidiary of the German company Germanischer Lloyd (GL-Mexico), managed to meet the deadlines. Forced to issue another bidding round, MEM adjusted the deadline, and yet simultaneously narrowed the audit’s work-parameters, or terms-of-reference (TRO), in ways seemingly intended to water down the inspector’s assignment. Bill Powers, who was monitoring the process, complained to MEM and offered his own version of TRO, as well as a stronger conflict-of-interest clause that prohibited potential auditors from having any past ties with Camisea stakeholders. Officials rejected both.

The second bidding process came to a close. Out of five companies, the winner was again GL-Mexico—a company with little experience in jungle pipeline inspections. What’s more, GL-Mexico had won the auditing job with a shockingly low bid of $1.9 million—one-third of the next highest bid.

Industry experts smelled a rigging.

“That fix was in before the bid went out,” said “CB,” a Texas pipeline engineer who requested anonymity for professional reasons. He had two decades’ experience in South America building and testing oil and gas pipelines and had represented one of the companies asked to bid on the audit contract. In a Buenos Aires café, he pointed out that according to MEM’s bid documents, foreign companies had just nineteen days to translate the document and respond. Likewise, the timeframe between the jungle site inspection of the pipeline and the deadline for submission was only one day. “For foreign companies that had to return from the site, formulate questions and have them translated to Spanish, that was impossible,” he said. Of the eleven companies asked to submit bids, not one was from Brazil, the South American country with the most experience laying pipelines in the Amazon.

When I returned to Peru this January, I talked to others who were upset about the GL-Mexico selection. I visited the home of a former Peruvian minister of energy named Carlos Descalzi, who had handled the Camisea contracts under a previous administration. “I think they chose the company that would put Camisea in the most favorable light,” he told me. “I will put it that way.”

When I visited his posh Lima home, Gallegos, the engineering dean, was adamant. “This is a cover-up, that’s all this is,” he said. He told me about meeting with Descalzi and the current minister of energy, Juan Valdivia. Gallegos said he had lost his temper. “When we discussed this with [Minister Valdivia] it was obvious, very, very clear that he couldn’t back up. The decision was going to be made the next day. And he said, no, this is going along . . . I cannot go back.”

Badly-Eroded Road
Erosion resulting from a pipeline access road (Amazon Watch).

Critics spun theories. Perhaps GL-Mexico was being paid off, or promised future contracts. Perhaps it had standing ties with Camisea Gas Project companies. In December, I spoke to Leslie Brownrigg, a former statistician with the US Commerce Department who has worked with non-profit groups to track relationships between Camisea companies. She found that GL-Mexico’s “subsidiary lists as a reference and prior contract client” a company owned by the TGP. She also reported that GL-Mexico has complex links with another company holding stakes in Camisea II.

*  *  *  *  

The Camisea Gas Project may have even more problems beyond conflicts of interest and suspect pipelines.

In January, I interviewed David Vassallo. His company, Eldaco, was put in charge of protecting the pipeline “against corrosion,” he said. “There are two layers of protection: one layer of organic silicone and one layer of modified silicone that protects the organic silicone. If there is only one layer put on, it is dangerous because contact with humidity and low temperature will reverse the polarity and attack the pipeline, destabilizing it and prematurely corroding it.”

He told me that Skanska, a Swedish company that partnered on construction of the pipeline, had ordered him to leave off a second layer because the project was behind schedule. They then refused to pay him unless he certified that the pipes were safe, which he refused to do. He spent months trying to get officials in Lima to listen. Eventually, he won attention from a congressman who chaired a powerful hydrocarbons committee. In May 2005, in a letter I saw written on Peruvian congressional stationary, the congressman said Malvinas—the natural-gas plant—was a danger and threatened lives of people in the area. The letter requested that a federal investigative committee look into Skanska and Pluspetrol. The following year, the crusading congressman would be appointed director of MEM. “He is now in the position to do something, but he does nothing.” The congressman is Juan Valdivia, the same minister of energy who would not question the GL-Mexico choice.

Vassallo says the problem is simple. “If it is not corrected, if he doesn’t want to invest any money, then it is going to explode. There will be a catastrophic explosion that we are all going to lament. And the large quantity of documents that I’ve sent will be the only memory.” Bill Powers calls the situation typical: “A crusading congressman becomes tight-lipped when the pro-oil-and-gas García administration comes to power.” Martínez of Pluspetrol told me she had never heard of the company or the claims.

It wasn’t the last I would hear about Skanska. A few months after interviewing Vassallo, Skanska officials were arrested in Argentina after admitting to paying millions of dollars in bribes. The scandal made public a taped conversation between the president of Skanska and a finance official. The official mentioned bribes paid in Peru. As I write this, Peruvian press reports say a Peruvian prosecutor has announced a new investigation into Skanska’s activities in Camisea.

*  *  *  *  

Besides the social and environmental fight waged against Camisea by natives and their backers, and the technical fights being led by Powers, antagonists are lining up along the economic front.

One Harvard-educated activist in Washington told me: “Nobody cares about the social [dimension] . . . some people care about the technical side, and everybody cares about the economic. Our strategy is to get the bank and others to listen to prestigious men, like Descalzi, who say that too much gas is planned for export. We want to say, ‘Peru goes to the expense of shifting its infrastructure to use natural gas, and then one day they figure out the gas has been exported.’ We want to show that it’s just a bad development model.”

Over two separate interviews in his home, ex-minister Descalzi, voiced his worries that Peru is in economic danger, thanks to the government’s policies. Hunt Oil and other companies would make a mint, but the nation was going to find itself in an energy pinch if more gas reserves are not found. Descalzi said contracts had been recalibrated, shifting the balance between local consumption and exportation such that, if additional reserves aren’t found, Peru could be forced to buy expensive imported gas products while exporting their own reserves abroad. He said when the Peruvian public comes to understand the impact of the changes, they will “bring instability to the country.” Jaime Quijandria, the executive director for Peru at the IDB, dismissed these warnings. “There is plenty of gas for domestic consumption and for export,” he said.

*  *  *  *  

If anyone will oppose excessive exportation of Camisea energy, it’s Hugo Gonzáles Sayán, the short, fiery president of Cusco. Cusco is the governmental department that controls the Camisea region but has no way to tap the gas—a predicament Gonzáles detests.

He proudly told me that natives in the Lower Urubamba had put him in office because he had been in the region; he knew their pain. Like many in the Urubamba whom I talked to, he cited the price of a cylinder of gas for domestic use: in Lima, eight liters of gas costs about thirty soles; in the Camisea region, where hundreds of millions of cubic feet of gas are being pulled from beneath villagers’ feet, it costs sixty soles. Martínez told me that Pluspetrol is examining a plan to provide gas cylinders for domestic use in the Lower Urubamba, but Gonzáles is unlikely to be wooed; when he talked to me he referenced some of the leaders he admired, local leaders who ensured that their nations control their own natural resources, take care of their own first: Chávez in Venezuela, Morales in Bolivia, and Correa in Ecuador.

This is the political divide of the Amazon’s future.

The Amazon region is the world’s last great commons, a massive and massively intertwined swath of rain-generating, carbon-sucking land. Satellites tell us it’s disappearing fast, thanks to loggers, soybean and sugarcane farmers, cattle ranchers, oil and gas companies, coca growers. The nine countries the Amazon crosses are, to varying degrees, burdened by grinding poverty, wealth disparity, and institutionalized graft and nepotism. I have interviewed dozens upon dozens of people from Venezuela, Brazil, Colombia, Bolivia, Peru, and Ecuador. Though keenly aware of injustice, many are too busy scratching out a life from less than two US dollars a day. With little hope of good—if any—education, medical access, public health and sanitation, they can’t afford to look beyond their child’s next meal. To them, as they struggle to get a foothold on even the lowest rung of the poverty ladder, Amazonian energy projects like Camisea promise jobs, schools, bridges, cheaper electric bills, fuels that don’t fill a kitchen with noxious fumes. In a word, hope.

Fortunately, technology that reduces pollution, “extended reach drilling,” for example, has come amid advances in information technology, all working to change expectations about corporate transparency and responsibility. We are talking as a global community about global warming. A hopeful person can see everything necessary to utilize rainforest energy in ways that uplift humanity while protecting plants and animals, though these means are often bypassed. Compare a black, sludge-filled abandoned oil well in the Ecuadorian jungle with an oil well in the US where regulations and social pressure keep things clean. Instead of fulfilling its promises of development that leaves “little footprint,” the Camisea Gas Project has emerged as a perfect example of how a hydrocarbons boom can fester with greed, ignorance, incompetence, selfishness, and unaccountability—the inability of a relatively small group of people to exercise control or admit mistakes.

Some things are easy to fix. Peru’s energy ministry should not be the body to approve the EISs (environmental impact studies) for the very mining and hydrocarbon developments it is tasked with pushing forward. Tiny, highly specialized, self-referencing technical service firms like GL-Mexico should not work for big oil companies and be tapped by governments to render judgment on development projects backed by the same companies. On a larger scale, rich nations and the multilateral lending institutions they back could provide breaks in the form of debt relief to a country, such as Ecuador, that is forced to auction its Amazonian hydrocarbons to get US-backed lending institutions off its back. It’s not surprising that South Americans feel bitterly toward institutions such as the International Monetary Fund and the World Bank. Paragraph III-1 of the World Bank’s 2003 Structural Adjustment Program Loan, a classified document obtained by The Nation in 2005, contains a secret deal that required tiny, indebted Ecuador to give 70 percent of spikes in oil profits (due to the Iraq war) not to more programs for needy Ecuadorians but to bondholders. Many rainforest defenders also like to point out that Peru’s Amazon oil and gas push started in earnest thanks to the US government; in May 2005, the US Trade and Development Agency (USTDA) awarded two grants totaling $1.3 million to Perupetro, the government agency that handles private sector investment in the hydrocarbons sector. “The grants reaffirm USTDA’s commitment to support PERUPETRO S.A.’s efforts to develop new private investment opportunities in the Peruvian oil and gas sector,” said a USTDA press release at the time.

Granted, each side spins things to its advantage. When I talked to a government doctor in Camisea about village boys’ rashes and sores, he told me it had nothing to do with the water. He said it was due to malnutrition and bug bites or other common problems. Biologists told me it wasn’t clear how much the Urubamba’s fish and game populations have been reduced by Camisea’s traffic or from increased pressures by native populations who now have modern nets and shotguns. Some credit can be given to oil companies—where it’s due. The Peruvian director of Conservation International in Peru told me the Camisea Gas Project has used modern technology to leave less of a footprint than gas projects in neighboring Bolivia. And comparing Chevron or Shell’s behavior today versus a decade ago proves that even the most powerful industries will change if they feel enough pressure.

It is hard to understand why oil companies don’t go the extra step. Making money for shareholders is a legal obligation and cost-cutting in the field is “logical” from one standpoint, but it seems managers are incapable of factoring in the costs of “bad blood” and future remediation. Oil companies working in the Amazon are just now realizing that more and more eyes are on them, that a globalized public in the Information Age has different expectations for transparency and a greater capability to ensure it. It was the internet, for example, that allowed me to access from my South American apartment a routine evaluation written for the IDB saying that “two years after beginning operations, Pluspetrol has not compensated communities within the area of influence for impacts related to the operation of the project.” It was the internet that allowed me, in 2005, to meet an Ecuadorian attorney who provided me with formerly classified security contracts between oil companies and the Ecuadorian military. He also gave me a copy of a “social license” between Italy’s Agip—a subsidiary of the multinational ENI—and three small Huaorani tribes living atop petroleum reserves in the eastern Ecuadorian Amazon. In exchange for unfettered access for Agip’s oil workers, the natives received, among other things, some rice, a $3,000 schoolhouse, a soccer ball, a referee’s whistle, and an Ecuadorian flag. Two of the tribal elders signed the agreement with thumbprints. Years ago, those morally offensive agreements might have stayed in huts and filing cabinets. In a globalized world, a journalist gets a Google Alert in Argentina and soon the contracts are posted on the website Alternet and referenced in Harper’s for millions of people to see, millions who can directly or indirectly put pressure on oil company shareholders, or publicly shame private companies into bringing First World standards to the developing world. Anyone reading this might call Hunt Oil or write letters to editors asking the company to explain why “extended reach drilling,” a method experts say is more environmentally sound, isn’t going to be used in Camisea II.

As the record oil boom continues, the opposition is growing. A few years after the USTDA grant, Peru now has put over 70 percent of its pristine Amazon up for energy grabs—a record number. And any oil worker in those areas will tell you that natives are becoming bolder and angrier. Hate will come out one way or the other; it will either have to be alleviated through sustainable development and mutual respect or it will emerge with a red-painted face behind a taught bowstring.

In 2006 I spent the night in a lightless shack on a gritty jungle farm near the Malvinas plant. My host was a mestizo peasant colonist named Leonardo Cardenas Ríos. He had a wife and five kids and made a “respectable” ten dollars a day selling supplies from a shack on the river. He told me Camisea companies laid pipes across his land but never compensated him. Over coffee and boiled yucca, he said he lost three cows when an oil company helicopter landed unannounced, sending them into a panicked run off a ravine. “We won’t destroy things, but we will keep them from coming here,” he pledged. From the doorway of his wooden shack we sat and listened to the jungle night. I saw a beautiful light blue glaze shimmering far off across the sky and asked what it was. They said it was the burn pipes at Malvinas. 

Kelly Hearn traveled to Peru on a grant from the Pulitzer Center on Crisis Reporting. More about this project on the Center’s website.

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