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By James V. Grimaldi
Wednesday, November 20,
2002
Two Texas energy companies, both closely tied to
the Bush White House, are lining up administration support for
nearly $900 million in public financing for a Peruvian natural
gas project that will cut through one of the world's most
pristine tropical rain forests.
A top priority of
Peruvian officials, who view it as key to energy independence,
the Camisea project has encountered fierce opposition.
Worldwide environmental groups and some members of Congress
argue that the massive extraction and pipeline project will
destroy the rain forest and the lifestyle of its indigenous
people.
The project backers' quest for financial
support from U.S. development banks will test the political
pull of the Texas companies, Hunt Oil Co. and Halliburton Co.,
which have longstanding ties to the Bush-Cheney administration
and the Republican Party. Next month, Hunt Vice President
Steve Suellentrop is set to accompany Commerce Secretary
Donald L. Evans on a trade mission to Peru, where President
Bush traveled in March to promote Andean
trade.
International consortia, led by Dallas-based
Hunt, Argentina's Pluspetrol and Peru's Tecgas, began work
earlier this year on the $1.6 billion project in the
southeastern part of Peru's Amazon basin. Hunt brought in
Halliburton's Kellogg Brown & Root unit to engineer a
proposed next phase, a $1 billion plant from which Hunt hopes
to export liquid natural gas to the United States by
2006.
The controversy surrounding the project
highlights the conflict between Bush's energy policy, which
advocates mining fossil fuels globally, and U.S. environmental
safeguards, which de |
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tractors say the administration plays down. Government
spokesmen say that no decisions have been made on public
financing and that a careful review is underway.
Under
federal regulations, projects receiving backing from the
Export-Import Bank of the United States and the Inter-American
Development Bank must pass rigorous reviews to ensure that
they will not threaten rare natural habitats.
But
officials reviewing the Camisea loan applications, who asked
not to be identified, say the project is proceeding despite
warnings that it may run afoul of international environmental
standards. Independent reviews commissioned by project
developers have also noted numerous problems, including fuel
spills, unauthorized pipeline route diversions, and
destructive erosion and landslides.
This month, Peru's
energy ministry fined the pipeline consortium $1 million for
clearing too much land, including parts of a protected nature
preserve, and building unauthorized access roads. The
companies have appealed.
Concerns about the project
have recently generated interest on Capitol Hill. Staffers for
Sens. Patrick J. Leahy (D-Vt.), James M. Jeffords (I-Vt.) and
Dianne Feinstein (D-Calif.) have met with representatives of
an array of concerned environmental groups, from the measured
World Wildlife Fund to the activist Friends of the
Earth.
"Even a carefully designed and well-managed
project -- which this, so far, is not -- will cause permanent
harm," said Leahy, the lead Democrat on the committee that
gives U.S. funds to the Inter-American Development Bank and
the Export-Import Bank. "If it goes ahead, far more needs to
be done to mitigate the damage."
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Hunt and Halliburton declined to comment. A White House
spokeswoman said the decision is up to the two agencies
reviewing the loan applications.
The Export-Import Bank, a
federal agency, and the Inter-American Development Bank, a
public lender run by the United States and other countries,
are considering as much as $500 million in financing.
Development banks in Europe and South America stand ready to
contribute about $370 million.
Spokesmen at Ex-Im Bank and
at the Treasury Department said no final decisions have been
made.
"Environmental concerns in all projects funded
by the multilateral institutions are important, and we take
them seriously," said Treasury spokesman Tony
Fratto.
The project envisions 21 wells from four
drilling platforms over two fields, heliports, worker camps,
sludge pits, and water and waste disposal facilities. A
gas-and-liquid separation plant is being built amid the
forest. Two pipelines, 700 and 335 miles long, will cross the
Andes before forking toward Lima and the Paracas National
Reserve, Peru's only marine sanctuary.
Ultimately, the sponsors hope to provide natural gas to
the West Coast of the United States through a terminal in Baja
California, Mexico, potentially feeding the lucrative
California market. Its backers intend the project to be one of
South America's biggest natural gas export ventures, rivaling
a similar gas export effort in Bolivia.
The resources
of the Lower Urubamba River region, from its famed mahogany
trees to exotic plants used in pesticides, have long attracted
outsiders In the late 1800s, rubber barons raided the
area and enslaved its tribal people. Yet Camisea today remains
as it was then -- mostly inaccessible, except by river.
In the 1980s, Royal Dutch Shell pros
(Continued on page 12)
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