Peru This Week: The Camisea Gas Project: From Peru to the World

"The Camisea Gas Project: From Peru to the World"
W. Alejandro Sanchez
Peru This Week
May 19, 2014
Originally published: http://www.peruthisweek.com/news-the-camisea-gas-project-from-peru-to-the-world-102996

On May 21-22, the Institute of the Americas will host the XXIII La Jolla 2014 Energy Conference in La Jolla, California. The two-day event will be a chance for experts to discuss the status, and the future, of energy production and consumption across the hemisphere.

Given the focus of this event, it comes as no surprise that Peru’s energy industry will receive star treatment at this prestigious conference. Namely, on Thursday, May 22, there will be a morning panel entitled “Spotlight on the Camisea Project at 10: Reflections and the outlook for Peru’s: historic natural gas project and the country’s hydrocarbon sector.” Attending will be representatives of Perupetro and Pluspetrol, as well as the CEO of Gran Tierra Energy Inc., a Canadian international oil and gas exploration and production company.

It makes sense that Peru will be discussed at length at La Jolla, and that there will be a special focus on the Camisea gas project. Over the past decade, Peru has enjoyed one of the most vibrant economies in Latin America. The country is a member of the Pacific Alliance as well as the Trans Pacific Partnership, a grandiose attempt at bringing major economies from Latin America and the Asia Pacific region, as well as the U.S., under one free trade area.

The Camisea Gas Project: The gem on the top of the Inca’s crown
The Camisea project stands out as the gem on top of the Inca nation’s crown when it comes to energy-related initiatives. Located in the Peruvian highlands, not far from Cusco, Camisea is an area rich with natural gas.

The gas field in Camisea was first discovered in 1986 and it began producing in 2004. According to the website Hydrocarbons-technology.com, the energy project cost US$2.7billion and made, “Peru a gas-rich nation with royalties of US$34 billion expected over the 30 year duration of the project.” The Camisea gas field is situated in the San Martin reservoir in the Amazon rainforest and is connected to the Port of Pisco via the Camisea pipeline.

In December 2013, the Peruvian Ministry of Energy and Mines reported that it is now believed that there are 2.6 trillion of cubic feet of natural gas in Camisea. The ministry is hopeful that these estimates mean that, apart from being exported, the gas can also be utilized for the Gasoducto Sur Peruano (GSP). The GSP is an ambitious project to build two thermal energy plants that will provide electricity to the southern part of the Andean nation.

Controversy of the Camisea Project
Nevertheless, the Camisea project has not been without controversy. Over the past years, there have been a plethora of protests against it. One major concern is that the gas itself is benefiting consumers abroad while companies are getting rich, but the people around Camisea do not benefit from the natural gas. Moreover, this extractive industry has destroyed part of the local ecosystem around the Camisea River. In 2010, hundreds of people in Quillabamba, in the Cusco region not far from Camisea, protested against the export of the Camisea gas.

Control over the revenue from the Camisea exports is a source of tension as well. In 2013, there were major protests in the province of La Convencion, in the Cuzco region, over congressional proposals that would have altered the budget that the area receives from the income country obtains from the Camisea. Castro Melgarejo, mayor of Quillabamba, where the protests took place, accused Lima of trying to take control of gas export income destined to the nation’s provinces, specifically Cusco.

Finally, this March, a delegation of indigenous Peruvians belonging to the Kirigueti community arrived in Cuzco to protest against the potential expansion of Camisea’s Lot 88. The gas in Lot 88 comes from two gas fields to the north and south of the River Camisea. A February 25 commentary in the renowned British daily The Guardian explains that, “three of the four producing well locations in Lot 88 are in the reserve and, according to the state oil and gas agency Perupetro, Lot 88 accounted for 43% of Peru’s natural gas output in 2012 and 43% between January to November 2013.”

Representatives of the Kirigueti declared to the Peruvian daily La Republica that all 20 thousand of their people are against Camisea’s expansion, as living conditions for them have worsened since the project started a decade ago. Moreover, they declared that the financial wealth that the Peruvian government enjoys attributed to the Camisea has not helped indigenous Peruvians that live around the gas field.

It is debatable to what extent the aforementioned representatives from Perupetro, Pluspetrol, or Gran Tierra Energy will acknowledge the demands of Peruvians that have been affected by the operations of the Camisea gas project. Hopefully, the XXIII La Jolla 2014 Energy Conference will meaningfully address the complex issues surrounding the Camisea project rather than simply praising its accomplishments while ignoring its shortcomings.