Karl Kendall 07 02 2002 04 32 PM To cgaraycochea@mem gob pe jbonelli@mem gob pe cc James Mahoney POLICY EXIMBANK@EXIMBANK Popi Artavanis STFG EXIMBANK@EXIMBANK Vasilios Giannopoulos STFG EXIMBANK@EXIMBANK Subject Pending due diligence visit from US Eximbank Camisea Project To Mr Garycochea-Vice Minister of Energy · Ministry of Energy and Mining Government of Peru Mr Bonelli - Director of Environmental Subjects Ministry of Energy and Mining Government of Peru Gentlemen This is follow up to a telephone conversation I had with Mr Carycochea this morning but first let me apologize for not writing to you in Spanish it would unfortunately lack the desired clarity as my Spanish is not so good Now as you may know the Export Import Bank of the United -States Eximbank has been requested to provide financial support for the upstream project portion of the Camisea Development This is separate from the support being sought from the lnterAmerican Development Bank IDB which is for the downstream portion of the project Naturally the two portions of the project are otherwise connected from a functional perspective At present Eximbank is engaged in its due diligence review for the upstream project portion including financial technical and environmental assessments However we are presently at a slight impasse in respect to the environmental review Though we have been provided with some environmental impact information by Pluspetrol one of the project's sponsor many of the environmental protections and social impact mitigations that are normally expected for a project of the sort have been recurringly referred to as the Government's responsibilities Please see the attached WordPerfect file 1'EnviroquestionsGoP wpd which contains seventeen representative questions in respect to the Government of Peru's obligations plans and capacities to deal with the environmental and social impacts related to the Camisea Project EnviroquestionsGoP wp Thus our desire to come to Peru and meet with persons within your Government who can address such questions or offer other guidance We would envision sending to Lima or other locations in Peru if advised a small technical team consisting of Ms Popi Artavanis our senior environmental specialist and myself as Eximbank's petroleum engineer plus possibly one more senior person With this in mind I solicit your kind aid if possible in suggesting specific dates and persons with whom we should meet and ideally arranging meetings so that w e all may best utilize the short time to achieve our goals Unfortunately though we would wish to arrange this visit as soon as possible the earliest practical date for our team's arrival with some flexibility would be on or about August 9th and may be limited to no more than a week This is regrettable but with hope we can accomplish much of what we seek in that time Naturally any suggestions in this would be most welcome and we will try to offer as much flexibility as we can with some adv nced notice We are aware of the importance the Camisea Project has to Peru nevertheless we also appreciate the environmentally sensitive situation of the project itself T-0 best assess the overall situation of the-project requires that we obtain complete and current information from all responsible parties to the project including in this case the Government of Peru' In this your help would be most appreciated Gentlemen thank you I look forward to hearing from you soon Karl Kendall -Deputy Vice President Engineering Environment Division Export Import Bank of the United States tel 202-565-3580 ' fax 202-565-3580 karl kendall@exim gov Questions from the Export Import Bank of the United States Engineering Environment Division as Pertaining to the Camisea Project July 2 2002 1 How is the Ministry of Environment's oversight relating to that of the Ministry of Energy and Mines with reference to the Camisea Project 2 When Resolution of 17 December 2001 was issued for Project certain few conditions were stated Has Government of Peru satisfied itself that the conditions have been met 3 What is Government of Peru's position as to preserving biodiversity Block 88 repr sents 170 000 hectares of which 90% is reported bye ERM to be in pristine primary forest 4 Pluspetrol is reported to be planning further developments in adjacent blocks also occupying pristine areas inhabited by indigenous populations Please confirm elaborate and explain Government of Peru's approach to increasing oil and gas concessions within sensitive areas 5 We understand that further forestry concessions are being granted in the surrounding areas north northeast and southeast of Block 88 How can further degradation occur Is certification planned Offsets as compensation for degradation 6 Recent changes to the overall Project include an increase in pipeline diameter larger areas required for supporting infrastructure and the additional relocation of the LPG facility as part ofthe·upstream portion of the Project Particularly we understand the LPG facility is facing environmental and social obstacles and sensitivities which will be explained in the future EIA What will be the role of the Government of Peru in the final location selection 7 The Environmental Management Plan for Block 88 as generic as it is makes reference to EPA SW 846 for monitoring soil groundwater surface water air and so forth How will these rather strict methods be enforced if monitoring has been lacking the far from both the Sponsor's side and the Government's side 8 The Project does not seem to even closely follow World Bank standards and safeguard policies 4 04 natural resources 4 12 indigenous people and so forth To what standards ecological and socio-cultural does the Government of Peru see the Project committed 9 The Project EIA and Sponsor's documentation addresses to a better extent the direct and short term impacts Indirect and long term impacts covering the 30 plus years operation of the Project could be significant yet have not be taken into account What is the Government of Peru's view on this critical point Is the Government developing any plans to mitigate induced access impacts that could otherwise lead to severe loss of forest and freshwater habitats affect livelihood cause increased social conflict and loss of cultural integrity within the affected communities 10 Public consultation process as carried out in connection with the EIA is deficient and did not allow communities to make informed decisions What is the role and part of the consultations undertaken by the Government prior to during and after project implementation 11 Compensation Plans have raised concern among communities and NGOs for not representing a fair and equitable process Is the government committed to additional compensations and how were short and long term impacts factored into the compensation process Explain Government of Peru's role in compensation process 12 What are the mechanisms that the Government of Peru has in place to monitor the Project its compliance penalties and so forth I 13 Has Government of Peru developed a Revenue Management Plan to ensure that affected communities are getting their appropriate share 14 Pluspetrol seems to indicate that controllng the access to the area as well as what happens once construction of a component is finished represents the responsibility of the Government Where does the Government of Peru see its role beginning and ending At buildings in camps development programs in communities and so forth 15 Could representative of the Government of Peru explain how the short term and long term loans from IDB to develop programs will be implemented 16 The Project is quickly advancing yet there is no methodology or mechanism in place for the Sponsors to ensure that contractors are complying with the necessary requirements nor is there a government presence to oversee the sponsors activities How is the Government of Peru keeping the project under control Neither Pluspetrol nor Techint have an exemplary environmental or social record 17 As per the ILO Convention 69 - Indigenous People's Rights does th Government of Peru consider that the Project adequately responds to the principles of the Convention Also as to other conventions Such as biodiversity Karl Kendall DVP Engineering Environment Division Export-Import Bank of the U S 811 Vermont Ave NW Washington D C 20571 Tel 202-565-3580 Fax 202-565-3584 karl kendall@exim gov