The Politics of Extractivism in Peru: Nation’s Largest Gas Project Threatens Indigenous Communities

Peruvian President Ollanta Humala has ambitious plans to transform the country into an energy hub, but his desire to diversify the nation’s energy industry depends on drilling for natural gas in a protected reserve in the Peruvian Amazon. Critics say such drilling could wipe out isolated indigenous tribes living in the area.

“It’s very bizarre for a reserve that’s supposed to be untouchable and off-limits to extractive industries that an EIA [Environmental Impact Assessment] is even conducted, let alone could even conclude that this type of project could be viable,” said Conrad Feather, a program officer at the Forest People’s Program (FPP) who wrote a report about the dangers of the project. “It’s completely contradictory.”

The report, Violating Rights and Threatening Lives: The Camisea Gas Project and Indigenous Peoples in Voluntary Isolation, uses sources such as government and company documents to show that the project expansion threatens the physical and cultural survival of tribes living in the Kugapakori-Nahua-Nanti and Others’ Reserve in the Peruvian Amazon, in the southern region of Cusco and adjacent to the Manu National Park. The Reserve is one of the most pristine and biologically-diverse areas in the world. It was created by the Peruvian government in 1990 to protect the land rights of tribes in the area.

The legal protections for the Reserve were strengthened in 2003 to include the “territorial, ecological and economic integrity” on behalf of the indigenous peoples living in the area. The government and company plans to expand gas drilling deeper into the Reserve, which include drilling 18 more wells, setting off seismic explosions and building a 10km pipeline that would cross 16 rivers, “would not only violate their fundamental rights as indigenous peoples to self determination as well as to their lands, territories and resources under both Peruvian and international law, but expose them to potentially fatal contact with gas consortium workers or other outsiders due to their lack of immunological defenses,” the report states.

The FPP published the report on January 20, a week before the government officially approved Argentine company Pluspetrol’s plans for exploration and eventual production in Camisea’s Block 88. Pluspetrol leads a consortium which includes Texas-based Hunt Oil, Spain’s Respol and South Korean SK Energy. The report also argues that the planned expansion will result in epidemics, diseases, increased death rates, forced relocation, and hostile contact with workers.

“Giving the expansion of Camisea the go-ahead sets a terrible precedent for the protection of indigenous and tribal peoples’ rights in Peru,” said Alice Bayer, Press Officer of the indigenous rights organization Survival International. “If gas companies are allowed to operate in areas specifically created for the protection of vulnerable uncontacted and isolated tribes, where will it end?”

A Dirty History

Royal Dutch Shell originally invaded Peru’s Amazon looking for oil in the Ucayali Basin in the 1980s. No oil was found, but the company did find a gas field in 1986. One of the unintended consequences of Shell’s clearing of some of the rainforest was outside contact by loggers and poachers with the Nahua tribe, exposing its members to illnesses which killed over 40 percent of the population, according to the FPP report. The company spent the next 12 years trying to develop the fields before abandoning the project in 1998.

The extraction concession was then awarded to the Pluspetrol-Hunt Oil consortium in 2000, with a separate pipeline concession to another consortium led by the same two companies, which became operational by 2004. The George W. Bush administration was an active proponent and supporter of the project, which is not surprising given that the CEO of Hunt Oil, Ray Hunt, was a big fundraiser for former President Bush and Vice President Dick Cheney. Hunt was also on President Bush’s Foreign Intelligence Advisory Board and a board member of Halliburton. Kellogg Brown and Root, a subsidiary of Halliburton now known as just KBR, was also involved in, and is a beneficiary of, the Camisea Gas project.

There was a series of environmentally-damaging gas spills in just the first 20 months of the pipeline’s operation. The Texas Observer noted in May 2006 article that, “In a February [2006] report, the San Diego-based engineering consultancy E-Tech International Inc. said the spills stemmed from shoddy pipeline construction. The downstream consortium, according to E-Tech, relied on unqualified welders and corroded piping.”

The Inter-American Development Bank (IDB), despite these problems, decided to lend the project $400 million. The IDB, which has a history of making questionable loans in the same way as the World Bank (which also invested $300 million in Camisea), didn’t just look the other way but actually fraudulently manufactured justification for the project. A 2010 investigation by the Washington Times stated that “bank officials in 2007 manipulated a technical investigation of a rupture-prone pipeline, producing a fraudulent report that cleared the way for a controversial $400 million loan to a natural-gas export project headed by a Texas oil company.” The article also reported that in the summer of 2006, a former Peruvian Energy Minister talked to two IDB officials alleging that Hunt Oil paid Peruvian government officials to change a national law restricting energy exports.

Moving Forward

Controversy continues to follow the Camisea gas project, even now with a president Humala, who was initially viewed as part of Latin America’s “pink tide”, whereas his two predecessors were seen as strong allies of Washington.

On July 2, Reuters reported about President Humala’s plans to build power plants, a petrochemical factory, a gas pipeline and expand the mining industry, while supplying cheap fuel for Peruvians. He said he wants this to be his presidency’s legacy, the lynchpin of which is the Camisea Project.

Later that month the Ministry of Culture released a damning report on Pluspetrol’s EIA, which included 83 observations as to why they could not approve it, among them being that the cultural and traditional lifestyles of the tribes would be threatened by the project and that two of the tribes could become “extinct.” Hours after the report was published online it was taken down by the government and rescinded. Three ministers resigned in protest.

In November, a more business-friendly report was issued in its place by a “special team” from outside the Ministry of Culture. Despite the severe threat to survival of indigenous tribes living in the area affected by the project, it now appears the expansion of Peru’s largest natural gas project will move forward.

“You can’t carry out activities near these people – contact put their lives at risk,” former Deputy Minister of Culture Paulo Vilca told Reuters last month. “And now the government has greatly reduced the size of their territory.” Vilca was one of the ministers who resigned in protest after the more critical July report was rescinded.

“The Peruvian government is required by their own laws to have a protection plan for isolated peoples, which they have failed to do,” added the FPP’s Feather. “There doesn’t seem to be real political interest in enforcing their own laws.”

The new operations will also result in deforestation, the production of toxic waste, the use of local water supplies, and discharges into rivers, according to the report. There is also a history of leaky pipes from past operations.

“There’s a contradiction going on in Peru right now,” said Feather. “At the same time the government is promoting extractivist industries they are also promoting themselves as champions of the forest.” Peru is hosting the UN’s Climate Conference in 2014 and the government has committed to eliminate net deforestation by 2021.

There are also international human rights laws and treaties that Peru is party to that protects indigenous peoples’ individual and collective rights. In fact, the UN called for the project’s suspension in March of 2013, and the UN Special Rapporteur on the Rights of Indigenous Peoples James Anaya said in December that the project should be suspended due to human rights concerns.

Feather said that while human rights laws, treaties and standards have improved for indigenous peoples over the last 10 to 20 years “the level of implementation on the ground remains really limited.” He added that a question the international community needs to grapple with is “how can these human rights laws, norms and best practices be implemented and provide effective justice for people on the ground being impacted by projects such as this…”

Another concern is social discord and the potential for violence. “As of September 2013, 27 civilians had been killed during protests since President Ollanta Humala took office in July 2011,” according to Human Rights Watch. While Humala has taken a less violent and confrontational approach toward protestors than his predecessor Alan Garcia, who referred to indigenous activists as “savages,” and who oversaw a massacre in the town of Bagua, Humala recently oversaw legal changes giving police and military the ability to use deadly force with impunity. Furthermore, Luis Manuel Claps writing for NACLA Report on the Americas in December 2013 revealed that mining companies have special agreements with the National Police to protect company assets and quell protests.

“We have seen over and over again that a groundswell of public awareness can have a massive impact on government policy and the protection of the rights of tribal people. If the people of Peru, and indeed around the world, start to oppose this project, the government will have little choice but to block it,” said Survival International’s Bayer, whose organization is working with groups in Peru to help expand opposition both nationally and internationally.