rUN 4 - 003 • • ti ' 04 1 r 1 1 iHl tNV 'i 'I DRAliT-NOT FOR cm cULATION OUTSIDE OF USG- DRAF r Camisea Meeting- May 15 2003 @ Participants lCcitb Kozloff US Treasuzy Leslie Johnston U S AID Cad Kendall James Mahoney BxJm Bank Leonardo Corral Public Elizabeth Brito Robert Mont omery Paola Van Houten IADB JuJio Bonelli MEM · Gonzalo Morante Jorga Dimopulos TOP Sandra Martine Francisco Negrini JPluspetrol Rn1ph Braccia Gustavo Mange ERM Brian Swinford Hunt Oil The following set of notes sumnmizes points discussed during the meeting and identifies follow up actions Comments me attri uted to organizations rather than imli'Viduals •'lJSG11 refers to Treasury and or USAID t should be noted that time constraints prevented a full discussion of ell outstanding issues Jndlgenou IHUfJJ in Block 88 The USG had prcvioualy submitted to Pluspetrol a set of isaucs that needed to be addresaed before construction could begin within the Nahua K ugapakori Indigenous Resmrc The Rspomea provided by Pluspetrol to the proposed rec ommendationli are a good first step to solve this issue There is convergence bet ween indigenous issues raised by the USG and the responses made by Pluspetrol however the critical issue remains of timing aequencing and legithnacy of activities USG email and Pluspetrol nscs ue p avided in Annex I JJtlmlo and uou ce use mopping JtudJ The USG believes that the proposed dy supervised by CONAPA is a good start The tudy will inc lude the entiro nrea of Block 88 and fom the basis for a prot acol addressing voluntary isolated populatiorui for this and future work within the llescrvc Two consultants have been hhed Juan Ossio and Virginia Montoyi and the study should be completed by the end of Tune There bas not been engagement or consultation with stakeholders in Pau on the design of the study or consultants hired Bec ause of the history of distrust some of which predates the cL11Tent project there rieeds to be mme sensitivity by the GoP and sponsors before moving ahead with this project Without adequate consultation on ihe study stakeholders may not have buy in into the process and support the study•s results This ts complicated by the c onc em that CONAPA has neith the legal authority nor the c hnical capacity to pronctivdy address indigenous issues associated with the project Actions • To overcome the above con ems it was recommended that th6 terms f refcrcnce for the ethnic and natutat rasource mapping and identification of con9ultants be shared at cast with the th l'ce Indiget ious Fedc rations and local NGOs for their fcedbac k This consultation would be conducted by CONAPA GTCI rather than PluspetroJ • MEM agreed to explore the passibmty of orgaruzi ng tips con Ultatioii through GTCJ Potential invitees '1'ould inc lude at least CONAP AIDESEP FECONAYY COMARU and CECONAMA I _ _ f j DRAFT- NOT FOR CIRCULATION OUTSIDE OF USG - DRAFf The group also discussed the concern about Pl Ispetrol's work activities starting in the Reserve - ispcci fioally on SM3 and conducting a topographic survey of the flow line - before the results of the study have been incorporated into these activities Work initiated in the Reserve could affect the 1Drget popu etion's behavior ihus preventing the study from achieving its pmpcsc of acquiring accurate baseline information not to mention have adverse socia impacts Ex Im stated that conducting activities in the Reserve before the study is done exemplifies a more aeneral sequencing problem with the project Pluspctrol ackno' Vledgcd tbnt the time constraints and transportation windows it faces may not allo V for project delays if the August 2004 deadline is to be met Some options to address the sequcncinr issue were discussed Besides the concept of a grace period another option is for 1hc Govemment to lower the quantity of product to be c ouunerciwly available in August 2004 Also IDB proposed a rapid appraisal during which project activities would be suspended This would be followed by a more detailed analysis wbil enabling the company to rCS rfflc activities upt n completion of the appi aisal The sequencing issue was not resolved at the meeting · Adlons • MEM will discuss internally and report back on tho feasibility of a specified grace periad for comp elion of the project in ordm for soeial and envirQruncntal concerns to be adequately addressed • Pluspctrol will investigate the implications of tempomrlly delaying activities in the Reserve on its ability to meet contract la deadlines and on eosts HeQ th ·1s111u After discussion of health aetivitics in the region by the Ministry of Health and PluspetroJ it was agreed that there were a number of ongoing activities However it was recognized that there may still be g ps with respect to monitorlng1 detectins and responding to health issues There continue to be lack of coordination with the hldigmous groups For example AIDESEP has conbllcted with the London Schao of Tropic al Health to do an assessment late May OptimaJ y this hould be coordinated - vith MoH Actions • MEM will raise the issue with MoH of how to address gaps effectively and coordinate with the · indiaenous groups efforts · Witn sJ Monitor The l SO recommends that there is a permanent independent pres ce in the field as Pluspetrol expands its activities into the Reserve This entity must be credible to NOOs and civil society and provide monthly reports for public lease A variety of different options wen discussed including adapting one of the ongojng monitoring functions by OSINEkG1 CONAPA IDB or Community Monitoring program The witness monitor could be arranged through CECONAMA FECONAYY and COMA RU Ongoing activities in the Reserve give urgcn9y to deploying Uch a monitor Adions • -MEM will eXplore the deployment of OSINERO monitors for technical 8Spects to be combined with community monitors for nontechnical aspects Status ofNahu11-Kugapoko i lndigenow Ru1rv The legal status of this Reserve needs ta 'be strengthened from a Ministerial Resolution to a Supreme Decree or Supreme Resolution This would also imply that there would be no more extractive activities within the Reserve and thus l31oek 57 and 58 would need to be ' ' JUN-ld4- l 1 ru r J 1t 1 1a4 1y DR Fr- NOT li'OR CIRCULATION OUTSIDE OF USG - DRAFT modified to cJjminate overlap with the Reserve MEM explained tb1 1t this was under the purview of JNRENA and PeruPetro Actions • MEM wi11 raise this issue with the appropriate entities lNRENA Pcni Petr0 and Minister and provide feedback as to the feasibility and timing of the proposed change in starus Comp n alion for Ruerve Pop11 otian The economic appraisal study inoludca the Nahua-Kugapakori Indigenous Reserve Funds have been set aside but how and when they will be applied is unolear This is because no invesbnent plan can be made with a voluntariJy isolated population Another unknown is th dc ation of who is entitled to ompensation due to direct or indircctiaipacts The ethnic and natural rasomce mapping study will provick a better fdea how to deal with this issue Criteria need to be established ta1 cjng into account findings of the study and both direct and indfrcGt impacts Actlona1 • MEM will discuss with CONAPA a procedure for how to ettablish criteria and a mechaJJism for c ompcns tioni · PARACAS Overarching disc ussions concerning Parac as were whether it is thD correct site for the c oastal facilities H the Pamces site is retained participants discussed options for ensuring positive developrnmt outcomes Sev key_conc cms were raised conc emlna technical and lcsal aspects of the site selection Alter11ad11• sits 111hction1 Bx -Im is not convinced that the alternative site aelection process caref JJJy considered environmental and social issues Ex-Im OJrectors wderstand that Block 88 has to be a component of tho project aince that is where the ah lral gas reserves arc however there ' VU a choice for where the ftac lionation plant and marina t erminal could be sited Since there was a choice a convincing case needs to be presented as to why Paracas an area of high ecoJogfeaJ sensitivity and biodiversity was 1 hoscn The set of alternative siics needs ta ba compared from cost benefit and envin nmcntal perspectives Construction cost oannot be the only factor for si Jecting Paracas Pluspctrol submitted all infonnation to DGAA and to Ex-Im but Ex Im did not feel c omfortqbJc with the information sent USG stated that many critical environmental issui s were not addteased in the EIA such as ballast water exchange and bnpac ts on nugratoey birds Pluspctrol st ates that the plant will be safe 8tld use environmentally-friendly tcclmology Its location on the buffer zone legally aJlows for siting of sui h plant PJuspe1rol smted that no other ac ceptable sites were foupd durmg the sjfc sclc ction study between Paracas and Luna Pluspetrol lfatcd it would lave to 10 as far as 70 km south of Paracas Reservo for an acceptable site Jt estimates that looking for an alternative site would take more than a year due to all the studies necessary Ex-Im inquired how the LNG facjJity having more stringent requ imnents fo1U1d a site fOT the plant north of Puacas Co-l11r 11t1011 w1 1 lJVGfacility BxcJusion zone tcquiremcnts for LNG do not allow ca loc ating of the two plants They ·c annot share the marine terminal or port facilities Pipeline distances and pro du requirements · do not match Participants djscussed an industrial 20t1e created for spin-off activities rc Nltmg from the Camisea project It is unclc a r Whether this would be feasible JUN-04-2003 04 18 EGAT ENV r • -'• · DRAFT-NOT FOR CIRCULATION OUTSIDE OF USG - DRAFr GOP said that the site selection process has been underway since August 2002 JNRENA has zsheady approved tbc site selection and submitted questions tegardmg the best practices for consuuction snq operations at this site · Actiom • Project sponsors and the GaP will consider the reqmst by Ex-Im and USO for a review of the site sclc tion process and the technical considt ration s that ert ISC d in the decision • Project sponsors will consider suspending construction aetivities at Peracu until the site selection issue is resolved Sponsors will report on the financial implications and GoP will report on the legal implications of doing so Legal iasuu The USG raised the issues oflegality with respect to the conditional approval of the ElA for the land facilities Starting construction in the site without full approval is a shun to the ETA pr ss due to segmentation of the project and all Che pressure that would come for a final EIA a ppt0val for 1he marine terminal once the facility was built This behavior does not 1 tlfiU the intent and purpose of the environinental assessment Studies need to adrlrcss cm tint cnviroruriental issues not addressed in the BIA prior to actual approval of the site to detemune whether mitigation efforts would offset negative impacts The August 2004 deadline does not give the opportunity for Pluspctrol to c'laluate other sites A recurso de rec onsideraci6n submitted by Colegio de Arquitcc1os bas en presented to MEM DGAA js pteparing a response to the recurso Because thls is an outstanding legal claim DGAA c an not provide additional infonnation To date this is the only appeal re eived by the DGAA If the matter goes to court partic ipants were UDS JI'I u to u hethcr a court eould issue an il iunction on construction activities until the issue is resolved Action • MEM wilt evaluate the legal isS ICS raised regarding the conditional approval of the EIA MEM will ask DGAA to evaluate the potential fO civil society to make a constitutional challenge to the approval and Vhether such a challenge could result in a n injurtction Mitigation effom IDB raised the issue that while the discussion conceminJ Paracas continues miti1ation measures will need to be identified and implemented There is the perception that siting the plant at Peracas diminishes the importance of the Reserve There was discussion of what 1bc government can do to demonz tratc commitment to protect the teserve in other respects and whether lO ating the fractionation pllt'lt at Paraeas could result in a positive environmental outcome Participants discussed the need for s1ratc111c planning which should specify what measures will be implemented and how they will be funded USO noted that until all the key envirQnmental issues were properly ncd it is not pom'blc to go forward with mitigatfon efforts since it is unclear what impacts one is miti a ating or whether or not the impaot can even be mitigated · Peru is in the process of' decentralizing many of its powers and activities from the centi sl government to regiona1 local go mment Dec ause this process is just beginning tho GoP bas identified a lack of eapaeity in regional governments with respect to land use planning and environmental law enforcement Another issua that needs to be resolved as the dcc entralization process proceeds is contradic tory national and local laws I ' • a _ DRAliT-NOT Ft R CIRCIJLATION OUTSIDE OF USG- DR A FT In discussing the environmental offset concept providing an incentive to either rclQCatc or buy out the · fishmeal pJanrs IDB stated 1 hat they did not sec removing the fishmeal indus1ry from Pirac as as an offset for the Can iisea facilities and do not plan any conditionalitics in the project docwnent wi th respect to this issue Participants di5cussed the need for a contingency plan Such plans will be made based on a mathematical model to assess the transport of spWs The plan will be approved by eoastguard and go into the national response system USG asked if intenu tional guidelines f'or spill nsponse wi1l be followed USG asked if the marine terminal will have a biodiversity monitoring program Currently Pluspetrol has submitted a monitoring program that includts a biotic component Actions • MEM will clmfy what entities haw authority to enforce Jawa and orders that relate to poJJution by the fishmeal plants and to unplcment land use controls in the coastal zone JlorloJIS Perfol'lllahce Issues The mei ting eoncluded with brief discussions on a rqe of topics The loan document will contain requirements that will be monitored and the IDB will have financial and 4isbursement requirement The bonowcn will need to document that they have complied with the performance required by the project Environmental insurance will need to be acquired TGP hBS a performanc e bond with the govenu nent that requires it to comply with all legal aspects of the concession contract including cn 1 iromnental aspects Pluspctrol also has a performance bond of similar characteristics USG wa asked about whetlJ er biodiversity monitorina UtOuld include Andean wetlands Participent s discussed how community monitoring ptogram could be unplcmented in all project BrellS despite po1itica1 issues in Upper Urubamba Comaiu and Cedia vs ProNaturaleza The time to Tesolve the issues discussed dwing the meeting is limited to e bout one month During this period conditions will need to be drafted to address the issues for inc01poration in the board documents to be issued lDB is considering aJI rcoommendations it has received on the project and is s ompiling the documents that wiJJ be submitted to the environmental committee The project document will include requirements for receiving the loan and what the project has done to address the issues raised duri ni 811 the consultations IDB wil promote int craction between civil society and the sponsors lDB probably wit hold additional meetings with local NOOs · Questions regarding social and environmental fW1ding mechanism need to be resolved The reason to put deadlines into the Joan document is to force resolution of these questions and not have them dra out the process of gettin ocial end enviror11mntaJ projects filnded and implemented USG had no immediate preference whether one or two entities should tnanagc the two funds Rather 1he key is to make aure 1lnit intent and goals for the funds were fulfilled Not all details need to be resolved prior to release of project docup-tent but structures criteria zmd operalin principles need to be in place Actions • Thi OoP wiJI state its position in providing a grace period for the companies to address environmental and socia1 issues Jt i- 04-2003 04 19 • EGAT ENJ lb 31' 4 DRAFJ'-NOT FOR CIRCULATION OUTSIDE OF USG· DRAFT • The USG will Convey its proposed priorities regarding areas for biodiversity monitorin1 • Projec t sponsors will return to Washington in mid June to continue discussions In the meantime meeting participants will use electronic coirespondcncc to address issues not discussed at the meeting · • TGP will hive additional mcctinas ovtr the next weeb reaarding teclmic al issues