Pioneer gas project in Latin America fails indigenous peoples

Every year a group of experts called the South Peru Panel issues a report on the country’s largest ever energy development which extracts natural gas and natural gas liquids from the Amazon and pipes them all the way across the Andes to Peru’s Pacific coast. The conclusions of its latest report? “Very positive macroeconomic benefits” and “without precedent in Peru’s modern economic history”, but pathetic, if not disastrous, for the indigenous people living near where the gas is extracted.

The South Peru Panel was established in 2009 as a condition of a $458.6m (£318m) loan by the Export-Import Bank of the United States to the Peru Liquified Natural Gas Project (Peru LNG), run by US company Hunt Oil, to build a 408 km pipeline, a gas liquefaction plant on the coast, and a marine terminal. The total cost is reported to have been almost $4bn - making it at the time the largest foreign direct investment in Peru’s history, according to the Panel, and the first and to date only LNG export project in Latin America.

The gas ultimately comes from what are known loosely as the Camisea fields in the Amazon - named after the San Martin and Cashiriari deposits found by Shell in the 1980s to the north and south of the River Camisea. Shell hasn’t been involved in upstream operations since the 1990s when, together with Mobil, it pulled out of a 4o year contract, but now it has a 20% stake in the LNG plant, pipeline and terminal, and 100% of the LNG exports.

The annual reports by the Panel - which is financed by Peru LNG but whose members work ad honorem - cover various aspects of both upstream and downstream operations of the Camisea gas project. Its most recent report argues there have been many benefits to Peru. These include “major contributions to economic growth and poverty reduction”, “major contributions to competitiveness through the supply of cheap energy”, savings of over $17 bn, an “accumulated difference” in the country’s trade balance of $21 bn, and the creation of approximately 57,000 jobs.

The Panel’s report is also positive about the environment and states Camisea has “almost completely” avoided “any negative impacts”. While some would vehemently dispute such a claim, it argues that Camisea’s “inland-offshore”, “roadless” model has “resulted in negligible deforestation”, that it has “helped reduce greenhouse gases from energy and land sources”, and that a “highly diverse and rich marine ecosystem is developing” around the LNG plant on the Peruvian coast.

But what about what the Panel calls the “social aspects” of Camisea? How have the lives of the indigenous peoples living near where the gas is extracted changed over the years, for better or worse? Has any of the billions of dollars earned by the project trickled down and enabled them to improve their lives?

Water and sanitation projects in Matsigenka communities in the region are “grossly inadequate”, the Panel states, with current systems “at best” delivering untreated river or stream water “with moderate to high degrees of fecal coliform contamination straight to households.”

“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 report reads. “The problem is no longer a matter of money or even technology or expertise, but mostly of adequate planning and oversight.”

On the Matsigenkas’ health the Panel claims to have “arrived at a snapshot of the evolution of basic health indicators over the course of recent decades. Some patterns clearly emerged: chronic infant malnutrition remains high.”

How high exactly? 59% of children in two communities visited in 2014 were suffering from some form of malnutrition, with 41.2% having chronic malnutrition, 11.7% general malnutrition and 8.8% acute malnutrition. In 2008, based on sampling over 450 children in 11 Matsigenka communities, those figures were 51.8%, 17.9% and 2.6% respectively. “While child nutrition has tended to decline over the past 20 years, or at the very best, remained stagnant, adults already paradoxically appear to suffer from the negative impacts of over-nutrition brought on by the consumption of sugar and other processed foods,” the Panel states.

The report also claims that fishing and hunting - both crucial to the Matsigenkas - are becoming increasingly difficult. There is a “universally noted decline in fish and game stocks”, the Panel states, and no “serious oversight, organization, or study of fisheries in the region with a view to long-term management.”

The education system is criticised too. It “suffers from internal lack of definition as to the nature and goals of bilingual intercultural indigenous education, the consequence of an administrative education system that is not well-adapted to the local cultural and geographical conditions,” the Panel states.

The report’s summary of Camisea’s impacts on - or missed opportunities with - the Matsigenkas is stark. “The enormous economic benefits of Camisea to the country as a whole have not translated into local development benefits,” the Panel argues. “The main weaknesses [of Camisea] identified are related to development opportunities for indigenous peoples in Camisea, who have not benefited and may be worse off than before in terms of health, nutrition, education, and overall perception of wellbeing.”

“May be worse off than before. . .” After how many years of operations and billions earned?

Regarding health and sanitation in particular, the Panel lays the blame on the consortium, led by Pluspetrol, running upstream operations, on local indigenous federations, and on the Peruvian state, which it calls “clearly” the “main culprit”.

“The government has shown little capacity to invest the vast sums of money it has received in an adequate manner so as to improve the lives of the indigenous communities suffering the brunt of the adverse effects the Camisea gas project is unleashing,” the Panel states.

Indeed, the Panel’s report would have been even more disturbing if it had included details on the health of other indigenous peoples in the Camisea region, besides the Matsigenkas, whose lives have been affected by the gas project. These include the Nantis, as they have been known by outsiders for the last 20 years or so, or “Matsigenka-Nantis”, living along the upper River Camisea and elsewhere. Increasing contact between them and “outsiders” - precipitated mainly by the gas project, sometimes effectively forced - is reported to have led to recurring epidemics of acute respiratory infections and severe diarrhoea and regular deaths, among other problems.

In 2003 a Ministry of Health (MINSA) report described the Nantis’ “current circumstance” as “defined by the fact that they are in an area directly influenced by the Camisea mega gas project.” It called them “extremely vulnerable” because of their lack of immunological defences and previous regular contact with “outsiders”, describing them as exposed to “repeated, high-incidence epidemics in all age-groups” and linking some deaths among them directly to Camisea. Ten years later another MINSA report concluded “epidemics continue to be the critical factor in determining the precocity of deaths” among the Nantis, noting that the recent expansion of Camisea has “led to changes in [their] movements ... These movements, responsible for some of the respiratory infections and severe diarrhoea epidemics, have at the same time introduced new morbidity risks such as sexually transmitted diseases.”

In fact, in 2013 the Ministry of Culture (MINCU) warned in a report that the Nantis could be made “extinct” if Camisea expanded. The government’s response? To “disappear” that report and, six months later, permit expansion to go ahead. Similar concerns were expressed by two of Peru’s leading experts on the Amazon in a 2014 report, by NGO Peru Equidad, which argued that the “Matsigenka-Nantis” could face “genocide” and a strategy has been adopted to claim they are Matsigenkas, not Nantis, in order to make it easier to open up their territories to gas exploration.

Other indigenous people impacted dramatically by the Camisea project include the Nahuas, in a different watershed, who were living without regular contact with “outsiders” when Shell arrived in the 1980s. Although sustained contact ultimately resulted from several Nahua men looting a logging camp in early 1984, Shell had actively sought them out and flown over their territories shouting at them with megaphones. Lack of immunological defences led to many Nahua men, women and children dying within months of the logging camp encounter - some say almost 50% died, some say more than 50%.

Over 30 years later and the Nahuas - in addition to struggling with Hepatitis B, tuberculosis and child malnutrition, among other things - have been hit by a mercury epidemic. In 2015 the Ministry of Health took samples from 160 people, across all ages, and found almost 80% had higher levels than considered safe, leading the government on 7 April this year to declare a 90 day “health emergency” among them. Gold-mining was initially touted as a possible cause, but where are the gold-miners? Others wonder if, or suspect, it is connected to Camisea.

“We’re concerned about the possibility [the Nahuas] are being contaminated by the toxic gases permanently emitted into the environment by the gas operations of the Camisea project,” national indigenous organisation AIDESEP wrote to MINCU’s Patricia Balbuena in February. “The release of mercury by the gas industry is confirmed and demonstrated in numerous scientific reports.”

In 1990, in part response to the Nahua’s experience in the 1980s, the government established the 443,887 hectare Kugapakori-Nahua Reserve and then, in 2003, enlarged it and changed its name to the Kugapakori-Nahua-Nanti and Others Reserve. In practice, it has meant almost nothing - and has almost entirely failed to protect the Nahuas, “Matsigenka-Nantis” and others living there. In 2000 the government signed a contract with the Pluspetrol-led consortium to operate in a concession known as Lot 88 - almost 75% of which overlaps the reserve. In 2012 and 2013 one Peruvian NGO, the Institute for the Legal Defence of the Environment and Sustainable Development, filed two lawsuits demanding that operations be banned there.

It is an appalling situation. All those billions earned by Camisea, yet the people living closest to it - the Matsigenkas, “Matsigenka-Nantis” and Nahuas - are struggling. No clean water, but plenty of mercury and malnutrition. Little fish, but lots of flu. Little game, but severe diarrhoea and regular deaths. So what concrete steps will Peru’s government - whose new president will be elected on 5 June - take to improve things? Don’t the companies who make such a financial killing - Shell, Pluspetrol, Hunt etc - accept that they have a responsibility to local people? What, say, are those companies’ response to the possible links between Camisea and the Nahua mercury epidemic?

Pluspetrol and Hunt did not respond to questions. All Shell would tell the Guardian was: “As a partner, we believe Peru LNG is aligned with Shell’s social performance principles, with a focus on programs that create opportunities for sustainable growth and environmental protection.”

Some of the Camisea gas, piped since 2004, is used in Peru to generate electricity, power transport and industry, and supply homes and businesses. Since 2010, some has also been piped to the LNG plant and exported, now by Shell, mainly to Mexico and Spain. The destination, royalties and prices are all hot political topics in Peru - and have been an important issue in the current presidential election race. Candidate Veronika Mendoza, who narrowly missed out on making it into the second round run-off this Sunday, says, quite fairly and understandably, that the priority for Camisea’s gas should be Peruvians and Peru - not multinational companies exporting it to other countries.

“We know that all the gas from Lot 56 [one of the two major Camisea concessions] is exported and the priority destination for the gas from Lot 88 [the other major concession] is Peru’s domestic market, but supervision is deficient,” Mendoza told the Guardian.

According to Mendoza, the contracts between the government and companies need to be renegotiated, and changes made to Peru’s Constitution to enable that to happen. “There should be monitoring to ensure that the priority for the production from Lot 88 really is the national market, and the contracts for Lot 56 and the others must be renegotiated,” she says.