Aerial view of a Camisea gas processing facility located deep in the heart of Peru’s Amazon Rainforest (Pluspetrol)
U.S. Officials Had “Unusual” Degree of Concern about “Ecological and Social Impacts”
Project Sponsors Promoted “Flawed Compensation Negotiations” and Inadequate Environmental Protections
Peruvian Government Said “Any Setback” in the Project Would “Undermine the Strengthening Process”
of Peru’s Democracy
Washington, D.C., November 26, 2024 - U.S. officials had an “unusual” degree of concern about the “potential ecological and social impacts” of the Camisea natural gas pipeline in Peru, according to declassified documents published today by the National Security Archive. The new Electronic Briefing Book consists of records on the initial stages of U.S. government financing for the massive and controversial international development project that first began production 20 years ago in 2004.
The documents shed light on the viewpoints of various actors involved in the project, including U.S. and Peruvian officials, multilateral development banks, private-sector sponsors, and NGOs, at a time when the George W. Bush administration was promoting contentious energy policies that emphasized the development of new sources at the expense of environmental concerns. The records illustrate the strategies, pressures, and leverage some U.S. officials used to try to mitigate the project’s significant environmental and social risks even as the Peruvian government argued that “any setback” in the project would “undermine” efforts to strengthen democracy in Peru.
The Camisea Gas Project–hailed as the country’s most ambitious energy project and crucial to Peru's economic development–has, from its inception, devastated one of the most environmentally sensitive regions in the world. Located in the Peruvian Amazon rainforest, the pipeline’s construction and operations over the last two decades have significantly disrupted the biodiverse Amazonian ecosystem and violated the rights of uncontacted indigenous groups.[1]
The project was met with immediate backlash by environmental and indigenous rights organizations, which argued that the pipeline would have “negative irreversible impacts.” A series of documented violations committed in the early stages of construction were discussed at length by U.S. officials. However, such concerns were being weighed against the potential benefits of Camisea; U.S. officials saw the exported liquified natural gas as a potential source of new clean energy that could help reduce air pollution in western cities.
An initial round of financing from the United States was being considered by the Export-Import Bank of the United States (Ex-Im) and the Inter-American Development Bank (IDB). The U.S. government effectively had two opportunities to express financial support for the pipeline project, and this “dual vote” also provided the chance to use the possibility of U.S. financing as leverage to gain cooperation on environmental and social oversight mechanisms. These internal deliberations produced mixed results: In August and September 2003, Ex-Im voted against funding the project, and the U.S. chose to abstain on the IDB loan, which was approved. While concerns about the environmental and social impacts meant the U.S. could not offer its full support, the abstention ultimately provided a tacit and indirect approval of the pipeline’s operations.
The documents posted today were first obtained under the Freedom of Information Act (FOIA) by the National Security Archive’s IFTI Watch Project, which reported on the openness practices of the global institutions that make the rules for finance, trade, and economic development.[2]
Peru was rocked by political instability and violence throughout the 1980s and 1990s. Both the state security forces and insurgent groups committed grave human rights abuses resulting in the deaths of approximately 70,000 Peruvians over two decades of conflict.[3] President Alberto Fujimori, who led a ten-year authoritarian regime, fled the country in 2000 following mounting accusations of government corruption.[4] Amidst the social unrest was an ever-worsening economic landscape, which was evaluated by the U.S. Embassy in Lima just six months before Fujimori’s ouster. In assessing the country’s principal energy issues, the embassy attributed Peru’s growing crude oil production deficit in part to a “dwindling interest in oil exploration” by foreign companies. The government’s unsuccessful attempts to privatize state assets and its recurrent intervention in the energy sector, coupled with multiple decades of political and social turbulence, had thoroughly discouraged foreign investment, according to the embassy. (Document 1)
Following a brief interim government, Alejandro Toledo of the "Peru Posible" party was elected president in historic democratic elections on June 3, 2001. Toledo was an outspoken advocate for liberal economic policies, and his administration set out to encourage foreign investment and achieve the full privatization of state assets. The Camisea Gas Project soon became emblematic of Toledo’s political legacy and was lauded as a solution to the country’s continuing social and economic instability.[5]
Throughout Toledo’s term in office, his administration encouraged the U.S. government’s active participation in, and support of, Camisea. In October 2002, Anthony Wayne, the U.S. Assistant Secretary of State for Economic and Business Affairs, met with Jaime Quijandría Salmón, Peru’s Energy and Mines Minister, during the Andean Regional Trade and Investment Conference in Lima. Quijandría Salmón stressed to Wayne the importance of the Camisea project to President Toledo, particularly given that Peru’s “troubled” electricity sector was then facing “substantial political opposition” amidst planned privatizations. Another, unidentified, source had told Wayne that “regional populations have conflated the ideas of resource distribution and corruption, based on the unhappy past history of corrupt privatizations under Fujimori.” (Document 7) Opposition to the privatization of various public sectors continued to grow, and in early June of 2003, Peru’s Congress voted against the sale of the state oil company Petroperú. (Document 21)
While the Peruvian government was facing complications in their efforts to attract private investment and reverse the country’s oil production decline, officials from the Toledo administration took an increasingly antagonistic stance against criticism of the Camisea pipeline project. In a meeting with President Bush in December 2002, Peru’s Ambassador to the United States, Roberto Dañino, told Bush that opposition to the project was coming from “radical environmentalist groups.” Given the intense international scrutiny the pipeline was receiving at the time, the reductive response from a Peruvian government official to President Bush indicates an attempt to minimize the gravity of the issues. (Document 10) This defensive tactic was also employed by other leaders in the region, most notably Ecuador’s outgoing president, Gustavo Noboa. His country’s Oleoducto de Crudos Pesados (OCP) pipeline was facing immense pressure from environmental groups, and investors were considering walking back their financing. Noboa considered the project to be a central achievement of his administration and accused environmentalists of “sabotaging” Ecuador’s economic development. (Document 6)
In their dealings with international investors, the Peruvian government repeatedly associated the Camisea project with the reinforcement of democratic ideals. Minister Quijandría Salmón wrote a letter in June 2003 to the President and Chairman of the U.S. Export-Import Bank, Philip Merrill–a close associate of Vice President Cheney–pleading Peru’s case for the bank’s financing of a segment of the project. The letter highlights the increasing desperation of the Toledo administration for U.S. financial backing, with Quijandría Salmón equating Camisea’s success to “the strengthening process of the Peruvian democracy.” (Document 18)
Convincing international financial institutions of the security of their investment in Camisea proved more difficult after 71 pipeline workers were kidnapped by armed fighters on June 9, 2003. Though the hostages were released to the Peruvian Army within two days, the highly publicized event brought additional scrutiny to the pipeline’s construction and the country’s continuing instability, with rumors that the Shining Path guerrilla group was behind the kidnappings. The military increased their security presence in the area as a result, and it was reported that “special elite armed squadrons” would be installed near the pipeline. Peru’s Vice President Raúl Diez Canseco publicly stated that the government was “adamant on preventing any event that might jeopardize badly needed investment in Peru.” (Documents 19 and 21)
The Camisea Gas Project had three components: the “Upstream Project” which consisted of gas exploration and extraction at four drilling platforms in the Urubamba Valley in Block 88; the “Downstream Project” which consisted of two pipelines that transport gas from the Urubamba Valley to the coast of Peru and included the post-production of crude oil and natural gas; and the “Distribution Project,” which included two processing and distribution systems on the coast near Lima, one of which was built within the buffer zone of the National Paracas Bay Reserve, a protected marine ecosystem.[6]
In 2000, the Peruvian government awarded the Camisea Project to two relatively inexperienced consortia, one for the Upstream segment and one for the Downstream segment. The Upstream consortium was led by the Argentine energy firm Pluspetrol and included Texas-based Hunt Oil, SK Corporation (South Korea), and Tecpetrol (owned by Argentina’s Techint). The Downstream consortium was led by Transportadora de Gas del Perú (TGP) and included Pluspetrol, Hunt, SK, and Techint. Construction of the Paracas Bay gas processing plant was later contracted by a subsidiary of Halliburton, a U.S.-based energy services company. Both consortia had ties to the George W. Bush administration: Hunt Oil CEO and Halliburton board member Ray Hunt was a major donor to the 2000 Bush campaign, and Halliburton’s former CEO and Board Chairman Dick Cheney was then serving as Bush’s vice president.
From its inception, Camisea’s administration lacked clarity. The project’s private sector sponsors, principally Pluspetrol and TGP, were responsible for overall development, environmental protections, and social impact mitigation. However, the companies often skirted accountability by passing oversight responsibility to the Peruvian government and cutting corners on their environmental and social impact assessments. U.S. officials repeatedly expressed confusion over the role the project developers played and the Peruvian government’s own responsibilities, remarking that many of the authorities “normally expected for a project of that sort, have been recurringly referred to as the Government’s responsibility” by project sponsors. (Document 5)
Initial U.S. financing was being considered by the Export-Import Bank of the United States, a federal agency that provides financing to facilitate the sale of U.S. goods and services overseas, and the IDB, which serves as one of the leading international financial institutions in Latin America and the Caribbean. While the IDB is not a U.S. federal government agency like Ex-Im, the U.S. is the bank’s largest shareholder, owning nearly a third of its capital, and has significant influence in shaping IDB investment policy.[7]
With Camisea project leaders vying for a $200 million Ex-Im loan to fund the Upstream segment and $75 million loan IDB loan for the Downstream segment, the U.S. was deeply involved in vetting the project’s viability ahead of funding approval. Beyond IDB and Ex-Im’s ongoing environmental, financial, and social impact assessments, the Treasury Department, State Department, U.S. Agency for International Development (USAID), and Environmental Protection Agency (EPA) each evaluated—independently and in an interagency capacity—proposals to mitigate the impacts of the project and determine the level of U.S. government support. The Bush Administration would thus have a dual vote to demonstrate its support for Camisea—both in Ex-Im’s decision to finance the Upstream segment and the U.S. government’s decision to nominally and financially back the IDB in financing the Downstream segment.
A chief consideration was assessing the impact of the pipeline on the United States. The U.S. contended to be the largest customer of the liquified natural gas exported by Camisea. Acknowledging the likelihood that an increase in both shortages and price for natural gas in the U.S. would be a “long-term dynamic,” the opportunity to consume from Camisea would be “in keeping with President Bush’s energy diversification policy.” In a nod to the Bush Administration’s energy and climate change policy, State Department officials saw Camisea as a vital “source of new, clean energy for the U.S.” that could “potentially reduce air pollution in western U.S. cities.” (Document 22)
Beyond the obvious economic benefits for the United States, the opportunity to support U.S. financing of the pipeline provided a semblance of control for oversight mechanisms. Camisea project sponsors had already committed well-documented environmental and social violations in the early stages of construction. U.S. government officials and NGOs frequently met to discuss how U.S. financing could impact the project going forward, and these groups communicated with the banks and agency officials to encourage concrete mitigation efforts. (Document 17) A paramount issue was the capacity of the Peruvian government to effectively administer the project and ensure environmental and social standards were being met. At the time, representatives of the IDB confirmed to U.S. officials their assessment that the government was not capable of monitoring the impacts of Camisea on the environment and affected indigenous groups. (Document 8) As a result, the IDB approved a loan of $5 million in December of 2002 in order to “strengthen the institutional capacity” of the Peruvian government and “promote sustainable development in the impacted area.”[8] However, during a meeting just months after the IDB loan was approved, U.S. agency officials and Vladimir Rodovic, the IDB country representative for Peru, agreed on the government’s “mixed progress on implementing the IDB’s institutional strengthening project” and discussed disbursing upcoming IDB funds “in tranches to guarantee progress on key issues.” (Document 13) The IDB loan was functioning as a stopgap solution, and it was clearly not effective.
The Toledo administration repeatedly stressed to U.S. officials that the project would move forward whether the U.S. “chooses to finance Camisea or not.” (Document 4) As financing deliberations dragged on, the Peruvian government and Camisea project sponsors grew increasingly impatient. The U.S. Embassy in Lima noted that Peru was “politically committed to completing the project by the deadline” and that IDB and Ex-Im funding was “important but not critical” to Camisea’s completion. (Document 22)
Pressure from civil society groups calling for U.S. oversight and the refusal of project sponsors to budge on the project construction deadlines produced a complicated set of considerations for Ex-Im and the IDB. A senior engineering expert at Ex-Im acknowledged that if the U.S. decided to vote against financing, the potential for “unneeded damage” would make enacting environmental and social regulations exponentially more difficult. This illuminated the agency’s chief concern that future efforts by the United States “to engage and seek specific improvements” with the project sponsors would be stymied if the U.S. rejected financing at this juncture. (Document 4)
These discussions also reveal that the U.S. government sought to better understand the IDB’s leverage—either real or perceived—over the project. In questioning the IDB over its “assessment of, and potential participation in, the Camisea energy project,” various U.S. agencies, including State, Treasury, and USAID, worked to clarify IDB’s role in financing the downstream segment. Working alongside Ex-Im, the IDB assured USG officials that it was considering the “cumulative impact” of both the upstream and downstream projects and would “maintain pressure on the consortium” to meet environmental and social standards. Ex-Im corroborated this by acknowledging that the IDB possessed a “significant amount of leverage” over the project sponsors to address environmental and social concerns. (Document 8)
In the months ahead of the Ex-Im and IDB votes, the two banks worked in close collaboration with one another, most notably at the executive level. A letter from IDB Executive Vice President Dennis Flannery to Ex-Im President Philip Merrill advised that they remain in “continued coordination,” especially “given the sensitivity of the project.” Flannery cited “routine communications/briefings between staff, [and] sharing of documentation and information” between the two banks, as well as “coordination of the use of URS Inc.,” an independent environmental contractor, by both institutions. The extent of communications between the two banks demonstrates that both IDB and Ex-Im saw value in coordinating their attempts to meet strict environmental and social standards. (Document 12)
The Camisea gas fields are located in one of the world’s most ecologically sensitive and diverse rainforests in the remote Lower Urubamba Valley of the Peruvian Amazon. The region has been described by scientists from the International Union for the Conservation of Nature (IUCN) as “the last place on earth” to drill for fossil fuels.[9] When the Camisea project began, the majority of the gas development area known as Block 88 was located within the Nahua-Kugapakori Reserve for Indigenous Peoples, and was home to at least four distinct indigenous groups: the Nahua/Yora, Nanti, Kugapakori, and the Machiguenga/Kirineri. This reserve was one of five created in 1990 to safeguard the rights of both uncontacted indigenous tribes and groups in the initial stages of voluntary contact with society.
Construction of Camisea was met with immediate backlash by environmental and indigenous rights organizations. Peruvian and U.S.-based NGOs produced environmental and social assessments and argued that the project would have “negative irreversible impacts on the biodiversity of this area and on indigenous groups living in isolation regardless of the strictest mitigation measures.” Prominent NGOs including Amazon Watch repeatedly expressed concerns over the project consortia’s insufficient mitigation standards, stating that “there are no financial incentives or strict enforcement in place to ensure compliance with plans over the life of the Project.”[10]
Citing the project leaders’ questionable environmental practices, NGO groups encouraged U.S. government officials to hire independent contractors to complete their own evaluations of the project. (Document 11) These concerns were received by top officials, including Ex-Im President Phillip Merrill, who was told by the U.S.-based NGO Environmental Defense that Camisea’s current Environmental Impact Assessments (EIAs) consistently violated U.S. government and Ex-Im environmental standards. According to Environmental Defense, the project sponsors’ “measures to address” environmental and social impacts were “either woefully inadequate, or more often, non-existent.” (Document 20)
The documentary record demonstrates that the U.S. government was aware early on that Pluspetrol and TGP refused to undertake adequate conservation mitigation efforts for Camisea. In mid-2002, over a year before the U.S. would vote on whether to support financing of the project, Ex-Im officials shared an “unusual” degree of concern over the “potential ecological and social impacts” of the project, and had “serious questions” as to whether Pluspetrol was meeting environmental standards. Pluspetrol officials continued to assure Ex-Im that the company was complying with the IDB’s “due diligence.” (Document 3)
With Pluspetrol leading the Camisea consortium by late 2000, a significant oil spill in an Amazon tributary that year would prove to be a bellwether for the Argentine firm’s disastrous environmental violations. Peru’s Ministry of Energy and Mines reported to the U.S. Embassy in Lima that the spill was caused by the partial sinking of a Pluspetrol-operated barge. The massive contamination and Pluspetrol’s “largely rudimentary” clean up efforts were compounded with the company’s refusal to pay a fine of nearly $500,000 (USD) ordered by Peru’s regulatory energy body OSINERG, with the argument that the long-term effects of the spill had yet to be determined. (Document 2) Private sector project sponsors like Pluspetrol often displayed a contradictory and antagonistic attitude towards the Peruvian government’s own rules and regulations.
Downstream segment project sponsor TGP was also hit with fines from OSINERG after it failed to comply with its own environmental commitments and carried out excessive deforestation along the project right-of-way (ROW). In an email exchange between Ex-Im officials and ERM (an environmental consultant to the Camisea gas field consortia), Ex-Im official Karl Kendall discussed the lack of oversight the project sponsors have over their own contractors, questioning “if and when the $944,000 [fine] gets paid.” Alluding to Iraq, he remarked that “relying [on] the Peruvian inspectors to clean up the project’s act is a parallel to relying on UN inspectors to assure weapons compliance of you know where…” (Document 9) Peru’s Ministry of Energy and Mines (MEM) later completed its own inspection of the rainforest sector of the Camisea pipeline and found that TGP extended “no consideration for the environment…during the construction of the ROW.” The report concluded that the environmental impacts committed by the company were “significant and of great magnitude” and recommended that OSINERG, “with the assistance of other government agencies, should demand compliance and apply corresponding sanctions” against TGP. (Document 31)
An additional debate was related to Camisea’s third component: the “Distribution Project,” which included processing and distribution systems on the coast of Loberia Beach near the National Paracas Bay Reserve. In interagency discussions, U.S. officials raised the issue of Paracas Bay, which they considered to be selected as the site “through an admittedly flawed process.” (Document 22) Ex-Im officials in particular were critical of Pluspetrol’s most recent EIA, which they felt insufficiently described how the company determined its site selection. (Document 14) Ex-Im’s vice president, James Mahoney, even urged Pluspetrol to “consider halting” the development of the LPG Fractionation Plant, subsea pipeline, and Marine Terminal at Loberia Beach and to instead “seek a lower impact and environmentally and socially acceptable site.” (Document 15)
At the same time, the U.S. government recognized that Camisea’s future revenue could serve as an opportunity to improve Peru’s overall environmental and social impact standards and potentially lead to a trickling down of “investment in areas such as health, education, and housing.” On Paracas Bay, specifically, a June 2003 U.S. Embassy cable relayed the idea that the Camisea Project would “[improve] Paracas Reserve management, monitoring, and cleanup.” With offset funding to cleanup, improved monitoring, and “strengthened GOP Management of Paracas Reserve…it is highly possible…biodiversity protection in the Bay will improve.” (Document 22) Perhaps at the urging of U.S. government officials, particularly USAID, to establish more adequate monitoring and oversight of the Distribution Project, President Toledo proposed the establishment of a Paracas Bay Commission to oversee the protection and cleanup of the coastal waters off Paracas.[11] (Document 30)
Concerns over the mismanagement of funds on the local and regional government level were raised throughout the initial financing deliberations. U.S. agencies lobbied for “better project monitoring and transparency” and “appropriate management of development benefits” from project sponsors and the Peruvian government. The U.S. Embassy in Lima noted that although the department of Cusco would receive 50 percent of Camisea royalties, the regional government might not have the revenue management and planning capacity to “handle the large inflows of revenues it will receive.” (Document 13) Beyond the risk of corruption and lack of financial transparency associated with Camisea, Peru’s rapid decentralization process, in which “many of the power and activities of the central government” were being transferred to regional governments, also presented the possibility that local governments might have a “lack of capacity” to adequately manage enforcement of environmental laws and land development. (Document 14)
Ongoing “flawed compensation negotiations” between project sponsors and impacted indigenous communities were also reported to U.S. officials. A June 2003 report from representatives of the NGOs Machiguenga Council for the Urubamba River (COMARU), Centro para el Desarrollo del Indigena Amazonico (CEDIA), Environmental Defense, and Amazon Alliance on affected indigenous communities along the Upper and Lower Urubamba River Valley cites a particularly egregious contract: in March 2002, TGP paid the community of Monte Carmelo only $68,000 (USD) for land that was previously valued at over $250,000 (USD). The NGOs concluded that TGP had consistently “taken advantage of the lack of community experience in calculating the monetary value of their lands and natural resources” over repeated compensation negotiations. (Document 23)
A staff delegation from the U.S. Senate on Foreign Relations Committee visited Peru in 2004 as part of the committee's ongoing inquiry into corruption at the multilateral development banks. In evaluating the compensation packages for local communities impacted by the Camisea pipeline project, the committee noted in a subsequent hearing that “transparent financial structures have not been developed to ensure that Camisea-generated funds are not misused by the companies, the Government of Peru, local governments or local communities.”[12]
While Ex-Im and the IDB deliberated on financing, NGOs and civil society organizations engaged in intensive lobbying of U.S. officials to mitigate the environmental and social impacts of the pipeline. As international pressure mounted, two “coalitions” of NGOs emerged with different aims and methods to influence the banks and project sponsors.
Ex-Im documents show that one tactic chosen by the NGO coalition of Conservation International, The Nature Conservancy, World Wildlife Fund, and the Smithsonian Institution was to push for “environmental additionality” as a loan condition for the project. The argument was that these banks could leverage their financing by imposing certain environmental and social standards. The organizations pointed to energy projects such as the OCP pipeline in Ecuador, which had already begun construction before an environmental assessment was conducted. This was something that Conservation International told a Treasury Department official was “unexpectedly common with MDB [multilateral development bank] financed projects” and was also the case with the Camisea pipeline. In response, Conservation International was “trying to work with the IDB to get some environmental ‘additionality’ to the Camisea pipeline project” in order to offset its inevitable impacts. (Document 6) In the case of the Overseas Private Investment Corporation (OPIC) financing of the Cuiaba energy project in Bolivia, the creation of a WWF-sponsored fund to mitigate the Bolivian project’s environmental impact “contributed to OPIC’s decision to authorize support for that pipeline,” according to the WWF. The NGO indicated in a meeting with Ex-Im officials that this method could be replicated for Camisea. (Document 11)
A proposed Loan Conditions document produced by the NGOs Conservation International, The Nature Conservancy and World Wildlife Fund, with technical advice provided by the Smithsonian Institution, was circulated to U.S. government representatives and IDB officials months before the scheduled Ex-Im and IDB votes. In late May 2003, the NGO coalition received a critical letter and memorandum signed by a different group of organizations: Rainforest Action Network, Friends of the Earth, Amazon Watch, and the Institute for Policy Studies. This group expressed their “grave concern” with the other coalition’s position and highlighted the “problematic history of failed loan conditions” for “recent controversial projects approved by international financial institutions in developing countries.” Using the Chad-Cameroon and Cuiaba pipelines as case studies, the memo concluded that WWF-negotiated conservation programs had not been implemented or lacked the capacity to work sufficiently in these sensitive areas. The Camisea project “appears to be even worse than at comparable junctures” of the Chad-Cameroon and Cuiaba pipeline projects, and Ex-Im, IDB, and the Peruvian government lacked “the capacity and will” to ensure that conservation mitigation efforts would be followed through, according to the coalition. By negotiating loan conditions with international banks and government agencies, the WWF and their partners were “giving a green seal of approval to financing of a controversial and destructive project” with U.S. taxpayer funding of Camisea. The letter and memo from Rainforest Action Network, Friends of the Earth, Amazon Watch, and the Institute for Policy Studies was forwarded on to representatives at Ex-Im, who noted the “[dueling] NGO” responses (Document 17) to the Camisea project.
Under federal regulations, projects receiving backing from MDBs must pass rigorous reviews to ensure they will not threaten rare natural habitats. The 1989 Pelosi Amendment, sponsored by representative Nancy Pelosi (D-CA) in her former role as House Minority Leader, requires that adequate environmental assessments be undertaken 120 days before a vote takes place at the World Bank and all regional MDBs, including the IDB. For the Bush Administration to support IDB financing of Camisea, the bank and project sponsors would have to abide by these environmental standards or the U.S. IDB Executive Directors would be required to abstain or vote against project financing.
In large part due to this environmental oversight consideration, the U.S. government sanctioned several interagency trips to the Camisea site. In addition to serious violations of compensation measures, the Treasury Department and USAID affirmed that there were many major stakeholder concerns with the project, including issues related to ROW, erosion control, revegetation, and community relations. (Documents 13 and 34) At the technical level, scientists at the Environmental Protection Agency (EPA) also produced various pipeline modeling, spill analyses, and storm wave and toxicity studies on Camisea. Summaries of two of these studies reported that Pluspetrol’s EIA “seems to consistently understate or relativize the environmental impacts of a spill of propane/butane, gasoline (jet fuel?) and diesel.” (Documents 24 and 29)
Just one month before the Ex-Im vote took place, the Director of the Bank Information Center’s (BIC) Latin America Program sent a memo to Ex-Im Vice President James Mahoney about the Environmental and Social Impact Report (ESIR) produced by URS Inc., the outside consulting firm contracted by both the IDB and Ex-Im. (Document 16) URS was commissioned to prepare this report ahead of the U.S. government vote on the project. In the memo, BIC urgently called on the U.S. Executive Directors at IDB (also referred to as USED) to delay the vote, as it found “striking omissions and oversimplifications of the information URS provided to IDB management.” (Document 26)
In what could be seen as a rushed attempt by the U.S. government to hold the IDB to stronger environmental standards ahead of the official vote, Treasury officials alerted the IDB that it must comply with the Pelosi Amendment on both the Upstream and Downstream portions of the Camisea Project, even though the IDB was only considering funding for the Downstream component. In IDB Executive Vice President Dennis Flannery’s response to Treasury, he expressed that this was the first time the IDB was being made aware of this consideration by the U.S. government, and that it would be unrealistic to expect IDB to comply with this amendment just before the Board was set to consider the project, rather than the typical 120-day requirement by Pelosi. (Document 28) Although it remains unclear if this was, in fact, the first time IDB was made aware of its need to comply with Pelosi on the upstream portion of the project, the tensions evidenced in the document highlight a sense of how the U.S. government scrambled at the last minute to avert environmental impacts and how the IDB resisted the U.S. government’s project oversight parameters. However, Document 8, discussed in the section above, makes clear that IDB was completing their assessment up to that point based on an evaluation of all project segments.
By the summer of 2003, several government agencies had made a decision about where they stood on greenlighting an initial round of U.S. funding. In July 2003, USAID officially recommended the U.S. government vote against IDB funding of Camisea due to the “significant environmental and social concerns that to date have not been sufficiently addressed.” Despite its official “no” stance, USAID’s statement to the Treasury Department did acknowledge the “significant economic benefits” that could come from the project, as well as the environmental violations that could occur if the Peruvian government did not partner with international financial institutions (IFIs) going forward. This document indicates that, while the agency could not in good faith recommend a “yes” vote on the project due to the myriad environmental and social concerns, it recognized the benefit of development projects partnering with IFIs to provide a “strong counterbalance to purely business concerns.” USAID considered the possibility that Camisea would be exclusively financed through private funds and assessed that a consistent and “long term commitment” to managing the environment and human rights would be “ill-served” should Camisea not receive financing from the IDB. (Document 25) Just one month after submitting its official stance to Treasury, USAID sent an email (presumably to officials at Treasury, though all senders and recipients are redacted in the document) reaffirming that it is overall “supportive of the Camisea Project.” (Document 30) Taken together, these two documents provide a window into varying degrees of agency support for the project. The State Department supported an abstention on the IDB vote until “further studies [could] be completed.” (Document 27) In the same email exchange, a Treasury official listed other agency views, but the Treasury Department and USED’s standing views on the project are redacted under FOIA exemption b(5).[13]
On August 28, 2003, the board of directors of the Export-Import Bank voted against funding the Upstream segment of the Camisea Gas Pipeline due to a lack of adequate environmental safeguards.[14] Two weeks later, on September 10, 2003, the IDB voted to approve $135 million (USD) to finance Camisea’s Downstream segment. The U.S. government abstained on the IDB vote, which was approved by the 45 other members of IDB’s executive board.
The U.S. government’s decision to abstain rather than vote “No” or “Yes” on the IDB vote sent several messages. First, the abstention signaled to the Peruvian government that the U.S. understood the importance of the Camisea project to Peru. The extensive internal deliberations detailed in the documents reveal that, while the U.S. government chose to not offer full support of the project, the abstention did ultimately provide a tacit and indirect approval of the pipeline’s current practices. To environmental groups, the Bush administration “failed to demonstrate moral courage and send a clear signal by voting ‘No’ on this project.”[15] Had the U.S. voted no, other IDB board member countries may have also voted against financing. U.S. officials sympathetic to the complexity of the issues raised by the project recognized that the abstention vote “had upset the GOP and reduced our leverage relative to if we had voted for it,” thus weakening U.S. influence for future project oversight. (Document 35)
After the vote, and despite relative optimism over subsequent progress in conservation efforts by project sponsors, U.S. officials acknowledged that “more work remains to be done” (Document 34). The scale of “Camisea’s broken promises” was crystallized in an event in Paracas Bay less than one year after the Ex-Im and IDB financing votes. (Document 32) According to a detailed timeline produced by a USAID official in Peru, on April 1, 2004, a fishmeal facility in the Paracas Bay Reserve released caustic soda, nitric acid, and fish oil into the bay, triggering a massive fish and marine life die-off. The USAID chronology records how, in the days after the wastewater was discharged into the bay, “scallops [were] starting to show signs of asphyxia…villagers observe the first dead fish on the beach…[and] mortality of crabs is massive in the Cangrejal zone within the Paracas National Reserve.” By April 10, 2004, “100% of the scallops are dead.” (Document 33)
Although it was confirmed that the fish die-off occurred due to fishmeal plant emissions, conversations between officials at the State Department, Treasury Department, and USAID reveal a “disturbing point” that “apparently PP [Pluspetrol] contractor ERM, which runs PP’s monitoring system in the bay, strangely stopped its daily monitoring during the height” of the die-off. “If true this is highly suspicious,” the officials determined. (Document 32) Regardless of the impact of Pluspetrol’s dredging activities in the Bay at the time of the die-off, the documents reveal NGO and U.S. government cynicism over the failure of Camisea’s project sponsors to provide cleanup oversight and the larger disappointment that, despite the Peruvian government’s newly minted Paracas Bay Commission, the Reserve had suffered an environmental catastrophe. The events of the Paracas Bay marine tragedy marked one of the first instances where “grand promises about Camisea’s benefits” to the Bay cleanup–and, in a larger sense, to Peru’s overall environmental, health, and social standards–were shattered. (Document 32)
The Camisea pipeline officially began production on August 5, 2004. The Toledo administration hailed the inauguration as a “historic moment” and a national victory. In the years that followed, the project has produced significant macroeconomic benefits, including major economic growth, poverty reduction, and contributions to competitiveness through the supply of cheap energy.[16] However, the environmental and social concerns voiced by parties involved in the initial financing have played out in a predictable and in some cases more disastrous way than even expected.[17] The pipeline leaked five times within the first 18 months,[18] and a damaging internal assessment of the likelihood of further spills due to faulty equipment was leaked to the public in 2006.[19] Despite a United Nations call in 2013 to fully suspend Camisea operations due to the documented impact on indigenous communities, the project continues to expand its operations deeper into the Amazon.[20] The Peruvian government has declared multiple states of emergency in the area over the years, attributing violence in the gas fields to drug trafficking organizations.[21] Regional corruption and uneven distribution of resources continue to plague the project.[22]
The Independent Advisory Panel on Development Issues in South-Central Peru, informally referred to as the South Peru Panel, published a report in 2014 on the environmental and social effects of Camisea’s development. In evaluating the project’s impact on indigenous groups, the report concluded that “the sorry, declining state of indigenous health and community sanitation structures in the Lower Urubamba is simply not acceptable given the wealth that Camisea has generated in all sectors of the Peruvian economy, and the hundreds of millions of dollars that have entered local and regional government’s coffers over the past 10 years.” The experts determined that the devastating conditions of these communities can primarily be attributed to a lack of “adequate planning and oversight” throughout Camisea’s history.[23]
Key decisions by the United States during the initial stages of Camisea’s financing deliberations have contributed to both the successes and failures of the energy project. Early efforts to influence oversight mechanisms were largely ineffective and can be attributed, at least in part, to the U.S. voting decisions in 2003. Twenty years of Camisea have produced mixed results: significant economic benefits with devastating environmental and social consequences. The documents posted today provide a window into the conception of international development projects and highlight the complexity of U.S. government funding considerations.
Document 1
State Department FOIA
The U.S. Embassy in Lima provides background and talking points for U.S. Energy Secretary Bill Richardson in the event of a possible meeting between Secretary Richardson and Peru’s Minister of Energy and Mines, Jorge Chamot, at the upcoming Fourth Asia-Pacific Economic Cooperation (APEC) Energy Ministerial. The cable reviews Peru’s energy climate and highlights several issues Chamot might raise with Richardson, including the encouragement of investment by U.S. companies in the construction and operation of a pipeline and distribution network linked to Peru’s Camisea natural gas field. According to Peruvian officials who spoke with the embassy, Chamot seeks U.S. government support in its dealings with the International Finance Corporation (IFC), “which has been very tough with regards to environmental standards for development [of the Camisea pipeline].” Such support would include Richardson’s assistance in persuading the IFC “to be less stringent” with these standards. Attributing Peru’s growing crude oil production deficit to both aging production wells and a “dwindling interest in oil exploration” by foreign companies, the embassy acknowledges that U.S. energy companies, with the exception of Hunt Oil, are not inclined to invest in the Camisea project. The concern for other U.S. companies, according to the cable, is that after an investment is made, Peru’s government “might change the rules of the game” and actively intervene.
Document 2
State Department FOIA
An embassy cable reports on developments following a significant oil spill in an Amazon tributary that forms the northern boundary of Peru’s largest natural reserve, which is also the second largest reserve in the Amazon basin. Approximately 5,500 barrels of heavy crude oil were spilled after the partial sinking of a barge chartered by Pluspetrol, the Argentine energy firm which is also leading the consortium to develop the Camisea natural gas project. The embassy received news of the initial cause of the spill through contacts in Peru’s Ministry of Energy and Mines. Crucially, however, the cable notes that a Pluspetrol executive contradicted these Peruvian officials by assuring the embassy they had not yet determined the initial cause. Scientists from the Peruvian Amazon Research Institute (IIAP) and the National Natural Resource Institute (INRENA) found the contamination of the spill “at levels of up to five and a half times maximum permissible levels for oil-based substances,” and warn that Pluspetrol’s “largely rudimentary” cleanup efforts will have serious adverse effects for the 86 communities, approximately 20,000 residents, who rely on the river’s water supply.
Document 3
EXIM FOIA
In an email exchange between Popi Artavanis, Senior Environmental Specialist at the Export-Import Bank, and Sandra Martinez, EHS and Native Communities Manager at Pluspetrol Peru, Artavanis provides an update on the status of Ex-Im’s review of the project. After a meeting at the bank’s offices in Washington, D.C., with representatives from Pluspetrol, Hunt Oil, Citibank, and Ex-Im Bank, “serious questions remain” regarding adequate mitigation efforts, a key factor in the bank’s environmental guidelines. The email to Pluspetrol expresses Ex-Im’s “unusual” degree of concern over the potential impacts of the project in the “environmentally sensitive areas of Block 88 and the Urubamba River.” Martinez’s response clarifies that Pluspetrol is also complying with the IDB’s due diligence on the downstream segment of Camisea, noting that the company is “re-initiating a dialogue” with impacted indigenous groups in the Nahua-Kugapakori Reserve.
Document 4
EXIM FOIA
A series of emails between representatives of two NGOs, Amazon Watch and Friends of the Earth-US, and Karl Kendall, a Senior Engineering Expert for Oil & Gas Sector Projects at Ex-Im, highlight NGO concerns over Pluspetrol’s conduct towards indigenous groups and the project’s skirting of environmental regulations. An Amazon Watch press release details recent meetings in Washington between the Argentine energy firm and other project sponsors with the Export-Import Bank and NGO representatives, in which criticism over the consortia’s “dirty dealings in Peru” has led civil groups to denounce possible Ex-Im and IDB financing of the project. Jon Sohn from Friends of the Earth-US tells Ex-Im’s Kendall that the IDB has “no credibility from an NGO perspective--no standards…[and is] trying to cut side deals with conservation groups.” He determines “the notion that this project is in line with principles of sustainable development [to be] without any merit.”
Document 5
EXIM FOIA
Karl Kendall from Ex-Im writes to Peruvian government officials at the Ministry of Energy and Mines with an update on Ex-Im’s current “due diligence” evaluation of the upstream project and the present “impasse” on their environmental review. Kendall attaches questions from Ex-Im related to the Peruvian government’s “obligations, plans and capacities to deal with the environmental and social impacts” of Camisea. Of concern to Ex-Im is project oversight, adherence (or lack thereof) to World Bank standards, and the government’s plans for, and role in, compensation for impacted indigenous groups.
Document 6
Treasury Department FOIA
Andrew Velthaus, who moved from the Treasury Department to the NGO Conservation International (CI) forwards a recent article from the Financial Times detailing public criticism over the Oleoducto de Crudos Pesados (OCP) pipeline in Ecuador to Keith Kozloff at Treasury. According to the article, international financiers of the OCP pipeline are facing pressure to withdraw their backing due to the environmental consequences of the project. The article details how initial construction of the Ecuadorian pipeline had already begun before an environmental assessment process was undertaken, resulting in a flawed evaluation, and cites an international campaign against further financing due to the project not meeting World Bank environmental and social standards. Velthaus acknowledges that Camisea also began construction before an environmental assessment was conducted, something “unexpectedly common with MDB [multilateral development bank] financed projects.”
Document 7
State Department FOIA
This confidential embassy cable details an unscheduled meeting between Peru’s Energy and Mines Minister, Jaime Quijandría Salmón, and the U.S. Assistant Secretary of State for Economic and Business Affairs, Anthony Wayne, during the U.S.-sponsored Andean Regional Trade and Investment Conference in Lima. Quijandría Salmón tells Wayne that the Peruvian government is seeking “unspecified help” in further financing the $1.4 billion Camisea project, which is the “largest single project that will be undertaken by the Toledo administration” and which the minister claims will add 1.5 percent to Peru’s GDP annually “for at least the next three years.” Charge John Calufield has met with NGOs and civil society groups who have expressed concern over the negative environmental impacts of the project and encourages the Peruvian government to “engage in dialogue” in order to “minimize potential problems.” Quijandría Salmón assures the U.S. representatives that “institutions [are] in place to assess such impacts” and reiterates Peru’s “strong interest in avoiding environmental problems.” The cable concludes with an assessment of Quijandría Salmón as a “sincere, sharp interlocutor” and Camisea as “an example of a type of project the country needs,” as long as “adherence to environmental standards” are met.
Document 8
USAID FOIA
The IDB’s U.S. Executive Director’s Office (USED) holds a meeting between USG agencies and IDB officials, in which representatives of USAID, State, and Treasury question the IDB on the specifics of the bank’s “assessment of, and potential participation in, the Camisea energy project in Peru,” given the significant environmental impacts associated with the pipeline. IDB states they have informed the project’s consortium that if the bank’s environmental and social standards are not met the IDB “would withdraw from the project.” The USED-IDB Executive Director specifically inquires whether the bank’s officials believe the project would go forward regardless of IDB funding, which the representatives confirm to be the case.
Document 9
EXIM FOIA
This is an email exchange between ERM’s Ralph Braccio and EXIM’s Karl Kendall and Popi Artavanis regarding a recent article in the Oil & Gas Journal about Osinerg’s fines against Transportadora de Gas del Peru (TGP) for environmental damage. OSINERG, the supervisory organization for Peru’s energy industry, claimed TGP failed to comply with its own environmental commitments and carried out excessive deforestation along the ROW, resulting in a $944,000 USD fine. Commenting on the project sponsors’ general lack of project oversight, Kendall gives “kudos for Osinerg (I think…or cynically is it my place to question motives?).”
Document 10
State Department FOIA
A confidential description of a meeting between Peruvian Ambassador to the United States Roberto Dañino and President Bush highlights energy issues between the two countries. Dañino assures Bush that, with the support of the Nature Conservancy and the World Wildlife Fund, environmental and social benchmarks for Camisea would be met. He stresses to Bush that the pipeline would add 1.5 percent to Peru’s GDP.
Document 11
EXIM FOIA
An Ex-Im staff email exchange provides background on a recent meeting with the NGOs World Wildlife Fund and Conservation International, who propose the production of an independent environmental assessment of the Camisea project. WWF/CI plan to send Dr. Robert Goodland, an outside consultant who has submitted reports for other energy projects in the region, including Ecuador’s Oleoducto de Crudos Pesados (OCP) pipeline. Ex-Im has already contracted the consultant URS Inc. to provide information to the bank for an environmental evaluation, but acknowledges that WWF/CI-produced mitigation recommendations “could be of value” to both Ex-Im and the IDB while they continue to evaluate possible financing of Camisea.
Document 12
EXIM FOIA
A letter from IDB Executive Vice President Dennis Flannery to Chairman and President of Ex-Im Philip Merrill outlines IDB’s current progress in evaluating environmental and social concerns with the Camisea project. The letter stresses the close collaboration between the two banks during the financing deliberations and illuminates that discussions are repeatedly being held at the executive level between IDB and Ex-Im. Flannery proposes that he and Merrill “keep in touch” as progress develops.
Document 13
State Department FOIA
This embassy cable describes a two-week trip to Peru from March 27-April 11 by a team of Treasury and USAID environmental experts to assess the environmental and social impacts of the Camisea project. The team was led by Keith Kozloff, Senior Environmental Advisor at Treasury; Leslie Johnston, Senior Environmental Policy Advisor at USAID Washington; and Victor Bullen, Regional Environmental Advisor for USAID La Paz. The inter-agency group conducted the trip in order to “prepare recommendations for the USG position on whether to support IDB financing,” and met with local communities, Peruvian officials, NGOs, and consortium staff to understand the “complex issues and tradeoffs” of the project. In a meeting with the mayor of the municipality San Andres, located within the Paracas buffer zone, the cable notes the mayor’s initial opposition to the project over environmental conservation concerns, but notes that his current support comes from the expectation that revenue flows will provide social and environmental improvements for the municipality.
Document 14
Treasury Department FOIA
Draft notes summarize a meeting held between Treasury, USAID, EXIM, MEM (Peru’s Ministry of Energy and Mines) IDB, TGP, Pluspetrol, ERM, and Hunt Oil. The purpose of the meeting is to discuss a series of issues surrounding the two project locations: indigenous issues in Block 88 and the selection of Paracas Bay as the correct site for coastal facilities. The summary makes note of Pluspetrol’s overall issues with “timing, sequencing, and legitimacy of activities.” One of the most significant points discussed for Block 88 is the issue of compensation for the Nahua-Kugapakori Indigenous Reserve. While funds have been set aside for compensation, the summary notes that “how and when they will be applied is unclear.” For the Paracas Bay coastal site location, U.S. government officials assert that many critical issues have been left out of Pluspetrol’s most recent environmental impact assessment (EIA). Pluspetrol states that it will be “safe and use environmentally-friendly technology,” and, regardless, it would “take more than a year” to find another site “due to all the studies necessary.”
Document 15
EXIM FOIA
This email and letter from Export-Import Bank Vice President James Mahoney urges Pluspetrol’s Sandra Martinez to “consider halting” the development of the LPG Fractionation Plant, subsea pipeline, and Marine Terminal at Loberia Beach near the highly sensitive and biodiverse Paracas Bay National Reserve. “Potential leaks and spills” could severely impact the site. Currently, Ex-Im’s greatest concern is Pluspetrol’s insufficient environmental impact assessment (EIA) of the site, which lacked information about the site selection process or alternative site consideration along the coast. Additionally, Ex-Im calls on Pluspetrol to “seek a lower impact and environmentally and socially acceptable site” for its LPG fractionation plant and marine terminal. At the conclusion of the letter, Mahoney states that he has copied Peru’s General Director of Environmental Matters with the Ministry of Mines and Energy to “expedite this matter with minimal impact on the project schedule,” demonstrating Ex-Im’s attempt to keep the project on schedule and circumvent government bureaucracy.
Document 16
EXIM FOIA
This document is the complete version of the IDB Environmental and Social Impact Report (ESIR) prepared by IDB contractor URS Inc. The ESIR presents a “summary of the environmental, social, and health and safety aspects associated with all three components of the Camisea Project and the proposed IDB environmental, social and health and safety requirements.” URS maintains in the report that “the ESIR is only a summary and does not attempt to provide all the details from all of the numerous existing project-related sources of information and documentation…in which there are numerous and extensive studies, reports and information.”
Document 17
EXIM FOIA
This email exchange forwards two reports from NGO coalitions about loan condition recommendations and the environmental impacts of Camisea. In the first letter and attached memo, one NGO coalition (Rainforest Action Network, Friends of the Earth, and Amazon Watch, alongside the Institute for Policy Studies) writes to another NGO coalition (The Nature Conservancy, World Wildlife Fund, and Conservation International) expressing their “grave concern” over the latter’s support for the “Camisea Fossil Fuel and Pipeline Project in Peru.” The first group calls on the latter to “reconsider your position with regards to the Camisea project and oppose IDB and Ex-Im financing for it.” Notably, they also mention that their partners in Peru–presumably Peruvian-based NGOs–”are under tremendous pressure and have urged us to hold a hard line on Camisea.” The second attachment is the latter coalition’s proposed loan conditions for the Camisea project. Acting on technical advice from the Smithsonian Institution, the proposal from Conservation International, the Nature Conservancy, and the World Wildlife Fund encourages Ex-Im and IDB to implement concrete actions to mitigate and control negative environmental impacts of the project. Taken together, these documents allude to opposing “teams” of NGOs, as highlighted in the top email wherein James Mahoney comments “[dueling] NGO letters - interesting.”
Note: The editors of this posting made the decision to combine three documents into one file for clarity. Two documents included various sections of the same email exchange. The document which included the more complete version of the email thread was combined with both the first NGO “Re: Camise Project, Peru” letter and memorandum, and second NGO “Loan Conditions for the Camisea Project” letter.
Document 18
EXIM FOIA
A letter from Peru’s Minister of Energy and Mines Jaime Quijandría Salmón to Ex-Im President and Chairman Philip Merrill pleads Peru’s case for Ex-Im cooperation in financing the downstream portion of the Camisea project “within the current timeframe established in contracts with the private operators.” Quijandria Salmón assures Merrill that Peru “has been working intensively to address the social and environmental effects of the Camisea project,” and “that its development will be made [in] a sustainable manner.”
Document 19
State Department FOIA
On an email chain, various U.S. officials involved in the Camisea project attempt to resolve queries related to the recent kidnapping of 71 development workers from the Argentine company Techint working on the Camisea pipeline. A State Department official copied on the emails informs the group that the Peruvian military has increased their security presence in this area as a result of the kidnappings.
Document 20
EXIM FOIA
This email exchange circulated between Ex-Im officials forwards a letter prepared by the U.S.-based NGO Environmental Defense addressed to Ex-Im’s President Philip Merrill detailing repeated violations of U.S. government and Ex-Im environmental standards on the Camisea project. The multipart document includes an attached memo prepared by the Environmental Defense as well as a separate analysis produced by the organization Global Village Engineers, which was contracted by Environmental Defense to evaluate Camisea EIAs and compare them to Ex-Im standards. Together, these analyses document successive violations of Ex-Im’s oil and gas development, environmental and ecological, and socioeconomic and sociocultural standards by the project sponsors. Most significant, according to the NGO’s synopsis, is the project’s indirect impacts to indigenous groups: “The measures to address these impacts are either woefully inadequate, or more often, non-existent.” Environmental Defense concludes with a call to Ex-Im and the U.S. Government “not to approve support for the Camisea Gas Field Development and NGL Fractionation Plan & Losing Facility until the project is changed in ways that resolve the above issues.”
Document 21
EXIM FOIA
This International Oil Daily article forwarded to various Ex-Im officials details the decision by Peru’s Congress to vote against the sale of the state oil company Petroperú amidst widespread public opposition to the privatization of various public sectors. Meanwhile, President Alejandro Toledo “has been trying to attract private investment to stop the country’s oil production decline.” The article also mentions that the government has “beefed up security” and “is going out of its way to reassure investors in the giant Camisea natural gas project” following the kidnapping of the Camisea development workers the previous week.
Document 22
State Department FOIA
A partially redacted cable from John Caulfield, chargé d'affaires at the U.S. Embassy in Lima, provides an overview of the Camisea project and current timeline for completion, stating that the “consortia building Peru’s Camisea Gas project have completed 65 percent of the project.” In assessing the impact of the pipeline on the United States, the cable asserts that the U.S. will likely be the largest customer of the liquified natural gas exported by Camisea. Acknowledging the likelihood that an increase in both shortages and price for natural gas in the U.S. will be a “long-term dynamic,” the opportunity to consume from Camisea will be “in keeping with President Bush’s energy diversification policy.”
Document 23
EXIM FOIA
Manrique Rojas, a Senior Advisor at Amazon Alliance, forwards to Ex-Im officials James Mahoney and Popi Artavanis a summary of the NGO’s findings from a June 2003 investigative trip from the “jungle section of the Camisea Project.” The trip was led by the Peruvian NGOs Machiguenga Council for the Urubamba River (COMARU) and Centro para el Desarrollo del Indigena Amazonico (CEDIA), Environmental Defense, and Amazon Alliance, where the NGOs investigated various indigenous communities affected by the Camisea Project on the Upper and Lower Urubamba River Valley. The trip report highlights TGP’s violations in compensation negotiations with the community of Monte Carmelo.
Document 24
EPA FOIA
EPA’s Chris Herman forwards to Treasury’s Keith Kozloff comments from EPA’s spill modeling specialist Walter Frick about his analysis of the 2-d MIKE21 spill model for Pisco and Paracas Bay completed by ESM on behalf of Pluspetrol. In Herman’s email, he summarizes that the reliability of the model in the specified area is a “threshold problem” because it is currently unverified, “permitting little confidence that the current modeling results accurately describe the effects of a platform or pipeline leak in the bay.” In the forwarded message, Frick concludes that the available data “suggests that the model does not seem to capture the variability in water movement in the vicinity of the terminal.”
Document 25
USAID FOIA
This USAID memorandum from Acting Assistant Administrator of the Bureau for Policy and Program Coordination Barbara Turner to Treasury Deputy Assistant Director (DAS) Clay Lowery and DAS William E. Schuerch recommends the U.S. government not support IDB funding for the Camisea Project due to “significant environmental and social concerns that to date have not been sufficiently addressed.” The project will be presented to the Board of Executive Directors on July 30, 2003. The recommendation to not vote in favor of the proposed Camisea Natural Gas Project is made on account of USAID’s “due diligence” under the International Financial Institutions Act (Title XIII/Pelosi Amendment). According to USAID’s memo, the project EIAs have lacked “comprehensive analysis concerning potential adverse impacts” and Pluspetrol has neglected to submit relevant baseline information, environmental monitoring procedures, and a spill response plan.
Document 26
EXIM FOIA
Ex-Im official Robert Montgomery forwards a memo from the Director of the Bank Information Center’s (BIC) Latin America Program to Ex-Im Vice President James Mahoney about the URS Environmental and Social Impact Report (ESIR) Assessment of the Camisea Upstream Project commissioned by IDB. In the letter, BIC urgently calls on IDB Executive Directors to “request up to three months delay on this vote” until several recommendations can be taken into account to improve the significant “discrepancies” within the ERIS. According to the memo, U.S. and Peruvian NGOs obtained a copy of this report and “found striking omissions and over simplifications of the information URS provided to IDB management, and the information IDB management is providing to IDB Executive Directors.” The memo addresses various “issues with the validity of environmental assessments produced by IDB contractors [that] further complicated IDB’s decision…” In the top email of the document from Montgomery to Mahoney, Montgomery states that IDB has “not accepted the URS report…that was contracted by IDB” but it’s unclear if IDB ultimately accepted and moved forward with the June 2003 version of URS’s ERIS.
Document 27
Treasury Department FOIA
This brief email exchange between Treasury officials mentions an interagency meeting in which the State Department’s Deputy Assistant Secretary (DAS) for International Finance Janice Bay “expressed the unified State Dept. view that the US position should be to request that certain further studies be completed before the US would consider supporting the project.” William Schuerch, Deputy Assistant Secretary for International Development, Debt, and Environmental Policy at Treasury, attended the interagency meeting and suspects that State Department Assistant Secretary Turner “is for an abstention. Not sure where Larson or WHem. is at this moment,” referencing Under Secretary of State for Economic, Business, and Agricultural Affairs Alan P. Larson. In the email below Schuerch’s, Treasury official Sara Paulson sends the current positions of “various interested parties…regarding a US vote in the IDB.” While the Treasury Department and USED’s standing views on the project are redacted under FOIA Exemption b(5), the email does list out the current views from Congress as well as Peruvian and U.S. NGOs. At present, there are a “range of views” within Congress, with House Minority Nancy Pelosi writing to Treasury Secretary John Snow “asserting [Camisea’s] noncompliance with [the Pelosi Amendment,” and with NGOs hoping to “defer IDB and Ex-Im votes until a range of issues can be addressed.”
Document 28
Treasury Department FOIA
Treasury officials and Camisea contractors forward an email from IDB Executive Vice President Dennis Flannery to Treasury official David Aufover regarding the application of the Pelosi Amendment to the upstream portion of the Camisea project. Flannery, who writes at the request of Treasury Under Secretary John Taylor for consideration of the Treasury’s decision to finance the Camisea project, states that the application of the Pelosi Amendment to the upstream component “has never occurred in the past either at the IDB or any other multilateral financing institution,” and that he “does not understand how a new interpretation would be applied to a project just prior to consideration…without ever having stated this requirement to the IDB.” According to Flannery, this notification is the first time IDB is being made aware that they must comply with the parameters of Pelosi, and that the “new interpretation” comes just before the Board will consider the project, rather than the typical 120-day requirement for compliance. Flannery reiterates that IDB has “taken enormous efforts” to be in full compliance with the Pelosi Amendment on the downstream portion of the project and is not in a position to comply with the request.
Document 29
EPA FOIA
Chris Herman of the EPA forwards comments from Dr. Brian Melzian on Pluspetrol’s Camisea EIA to Keith Kozloff and Rick Williamson at Ex-Im. Melzian addresses several concerns over the potential effects of storm waves and toxicity of potential released material from pipeline rupture. One of Melzian’s biggest concerns is that “the report seems to consistently understate or relativize the environmental impacts of a spill of propane/butane, gasoline (jet fuel?) and diesel. IF THIS IS TRUE; AND BASED ON THE OIL TOXICITY INFORMATION THAT I SENT TO YOU FOLKS; THIS MAY BE A MAJOR WEAKNESS OF THE EIA.” According to his analysis, these oversights could cause potentially catastrophic toxicity issues to the local marine environment and other areas “UPSTREAM (Upshore) OR DOWNSTREAM.” Notably, Herman expresses confusion when forwarding Melzian’s analysis to Kozloff and Williamson because “it seems that the description of what will be in the pipelines changes from document to document.”
Document 30
USAID FOIA
This is a forwarded email from a USAID official regarding a recent Peruvian Embassy meeting with the U.S. Treasury Team and USAID to verify the Government of Peru’s oversight of the site selection next to the Paracas National Reserve (all email addresses are redacted). The email confirms that “the [Peruvian government] had not followed the correct steps” and that the environmental impact on Paracas must be minimized. The email sender reiterates that USAID is “supportive of the Camisea project” and that the project is critical for Peru’s economic development. If successful, the project could also be a model for foreign investment in the country, but there are still significant environmental mitigation concerns. On the Paracas Bay issue, USAID proposes the establishment of a Paracas Bay Commission to oversee the development of the bay, USAID concludes that “support from Washington may be needed” to implement better environmental processes for future projects.
Document 31
Treasury Department FOIA
These are the findings of the Peruvian government’s environmental inspection of the rainforest sector of the Camisea Pipeline as completed by Peru’s MEM and the Technical Group for Inter-Institutional Coordination for the Camisea Project (GTCI). Throughout a 9-kilometer stretch of the right-of-way that spans both project segments, the report finds that TGP extended “no consideration for the environment…during the construction of the ROW.” It concludes that “negative environmental impacts generated during [Camisea] construction are significant and of great magnitude.” MEM and GTCI recommend that, “given the impacts and noncompliance with the EIA and with other prior (OSINERG/GTCI) observations,” OSINERG, “with the assistance of other government agencies, should demand compliance and apply corresponding sanctions” against TGP.
Document 32
State Department FOIA
This is an email exchange between Aaron Goldzimer of Environmental Defense and officials at the Treasury Department, USAID, and State Department about a massive fish and marine life die-off in the protected Paracas Bay Reserve near the Camisea gas fractionation plant due to the dumping of fishmeal wastewater into Paracas Bay, causing oxygen levels in the water to plummet. David Lippeatt at the State Department notes that, while Pluspetrol was “not dredging or laying subsea pipeline at any time during this episode,” it is “highly suspicious” that Pluspetrol’s monitoring contractor ERM “strangely stopped its daily monitoring during the height of this episode.” Lippeatt also says they will “strongly protest this event” to GOP officials, indicating the lack of leverage the U.S. government has to work with the Peruvian government at this point in the Camisea project.
Document 33
Treasury Department FOIA
USAID official Leslie Johnston sends Treasury’s Keith Kozloff the timeline of the Paracas Bay fish and marine die-off. USAID officials attribute the die-off to nearby fishmeal processing, which they believe compounded an existing algae bloom. On April 1, 2004, the fishmeal plants prepared their tanks for the fish and emptied wastewater from this process into Paracas Bay. From April 2 to April 9, 2024, “scallops begin to show signs of asphyxia…massive fish mortality on most beaches…some organisms show signs of burns…The ocean water is extremely acidic.” By April 10, 2024, “100 percent of scallops are dead.” According to the timeline, there is “unanimity” that the problem was caused by the fishmeal plants, and Pluspetrol “stopped dredging in the Bay several days before the fishmeal plants started operations.” Like document 32, this document also mentions that “ERM stopped its monitoring between april 5 and april 9,” but does not expand on the topic.
Document 34
USAID FOIA
This trip report details a joint USAID-State Department follow-up assessment of the Camisea Project from May 28, 2004, to June 9, 2004. As part of the visit, the U.S. government team met with and conducted interviews with Peruvian government officials, the Camisea Ombudsman, project sponsors, contractors, industrial fishmeal plant owners, and representatives from Peruvian NGOs and civil society groups. According to USAID’s assessment, “much progress has been made,” but there were still major concerns raised by stakeholders during the visit, including right-of-way, erosion control, revegetation, environmental issues, and community relations. The most significant issues highlighted in the report are related to compensation of impacted Shimaa and Segakiato communities within the project right-of-way, infighting between Peruvian government entities over the establishment of the Paracas Bay Commission, and general non-compliance by Pluspetrol over environmental safeguards and project monitoring.
Document 35
Treasury Department FOIA
In an email exchange, Treasury Department, State Department, and USAID officials circulate a Camisea demarche for “final clearance.” Keith Kozloff, Senior Environmental Advisor at the Treasury Department, provides cable edits to State Department official Kerri DiZoglio and notes that Assistant Secretary of the Treasury for International Finance and Development Randy Quarles met with U.S. NGOs and “left the door open for possible USG support for an independent audit and/or independent monitor” during a recent meeting. In Kozloff’s follow-up email to DiZoglio, he relays that Quarles had to remind the NGO coalition that “the US vote on the project had upset the GoP and reduced our leverage relative to if we had voted for it” in response to their frustrations with working with IDB. Kozloff’s comment makes it apparent that the U.S. government understood the abstention vote had made it more difficult for U.S. government and NGO coalitions to conduct effective environmental and social oversight.
[1] David Hill, “Pioneer gas project in Latin America fails indigenous peoples,” The Guardian, June 2, 2016; Bank Track, “Environmental and Social policies of major Amazon oil and gas financiers fail to protect the Rainforest and its peoples,” June 11, 2024.
[2] The National Security Archive’s IFTI (International Financial and Trade Institutions) Watch Project is no longer active. The majority of the FOIA requests for Camisea documents were sent in 2003 by former National Security Archive researchers Sajit Gandhi and Vivek Ramkumar. Subsequent releases of Camisea records occurred over the following five years. Of the hundreds of documents and thousands of pages the Archive has gotten released about the Camisea Pipeline, a large swath of released materials have been redacted under the FOIA’s b(5) exemption due to “interagency or intra-agency communication” as well as agency-claimed “draft” materials. The editors of this posting sent several follow-up FOIA requests for Camisea documents—particularly email exchanges--that were previously redacted. While these follow-up requests were not answered by the time of publication, the editors felt it was imperative to advocate for the release of documents that would shed additional light on internal deliberations at agencies like the Export-Import Bank, Treasury Department, and State Department.
[3] The National Security Archive, Tamara Feinstein, “Peru in ‘The Eye of the Storm’,” January 22, 2002.
[4] The National Security Archive, Peter Kornbluh and Jeremy Bigwood, “Fujimori on Trial,” December 10, 2007.
[5] In October 2024, Alejandro Toledo was sentenced to 20 years and six months in prison for his involvement in the Odebrecht corruption scandal. He was convicted of taking $35 million in bribes during his term in office in exchange for a contract with the Brazilian construction giant to construct a road connecting Peru's southern coast to an Amazonian area in western Brazil. Two other ex-presidents, Pedro Pablo Kuczynski and Ollanta Humala, are also being investigated in the Odebrecht case.
[6] In the 1980s, after the Peruvian government signed an oil contract with Royal Dutch Shell, the oil and gas company discovered the Camisea gas fields. In 1994, a consortium of Shell, Mobil, and Petroperú vied to assess and develop the gas fields. However, after disputes with the government, Shell abandoned the project in July 1998. New York Times, Bloomberg News, “INTERNATIONAL BUSINESS; Shell and Mobil Quit Peru Gas Project,” July 17, 1998.
[7] U.S. Department of the Treasury, Press Release: “Secretary of the Treasury Janet L. Yellen on the Inter-American Development Bank Group Annual Meetings and IDB Invest Capital Increase,” March 11, 2024.
[8] Inter-American Development Bank, “Inst. Environmental and Social Strengthening of the Camisea Project.”
[9] Cultural Survival, “Peru’s Camisea Gas Project Falls Short of World Bank’s Environmental Standards,” November 14, 2002.
[10] Amazon Watch, Patricia B. Caffrey, “An Independent Environmental and Social Assessment of the Camisea Gas Project,” April 1, 2002.
[11] Latin American Digital Beat (LADB), “Peru Funds Camisea Natural Gas Project,” University of Mexico, September 19, 2003.
[12] United States Senate Committee on Foreign Relations, “Combating Corruption in the Multilateral Development Banks [Part III],” September 28, 2004.
[13] The National Security Archive has since filed a FOIA request for the redacted portions of this document.
[14] Export-Import Bank of the United States, “Ex-Im Bank Declines Financing Request to Back Peru’s Camisea Gas Development Project,” August 27, 2003.
[15] LADB, “Peru funds Camisea Natural Gas Project,” September 19, 2003.
[16] The Guardian, David Hill, “Pioneer gas project in Latin America fails indigenous peoples,” June 2, 2016.
[17] In December 2007, the IDB approved an additional $400 million loan for an additional phase of the Camisea project, which included the construction of the Peru Liquid Natural Gas (LNG) plant by Hunt Oil Co. In early 2008, the Export-Import Bank approved a $458.6 million long-term loan guarantee to support U.S. exports for the Peru LNG project.
[18] Amazon Watch, Reuters, “Camisea Gas Pipeline Leaks for Fifth Time in Peru,” March 5, 2006.
[19] The North American Congress on Latin America (NACLA), Kelly Hearn, “The Camisea Cover-Up,” September 4, 2007.
[20] The Guardian, David Hill, “Peru ignores UN calls to suspend Amazon gas expansion,” January 13, 2014.
[21] Bnamericas, “Peru extends state of emergency for gas pipeline,” February 24, 2020.
[22] Latin American Digital Beat (LADB), Elsa Chanduvà Jaña, “Gas for Peruvians, Not for Exportation,” August 27, 2010.
[23] Independent Advisory Panel on Development Issues in South Central Peru, “First Consolidated Report (2010-2014) Camisea: Emerging Lessons in Development,” 2014.