IFC: carbon cowboys in the Amazon

4 December 2007

A September report by NGO Amazon Watch warns the International Finance Corporation (IFC) and the Inter-American Development Bank (IDB) that they risk breaching their own social and environmental safeguards if they provide funding for the Peru liquefied natural gas project, or Camisea II. Both banks are considering support for the gas liquification plant on the Peruvian coast and the 400 km pipeline from the Andes to the coast. Together they would provide $1.1 billion for the $3.8 billion mega-hydrocarbon project in the Peruvian Amazon. The IFC is to decide in early January.

Camisea II is an expansion of the controversial Camisea I, or Camisea gas project. It was repeatedly criticised for negative impacts on indigenous communities and the ecologically-fragile rainforest, and for multiple violations of national and international standards. These criticisms have been upheld by the Peruvian human rights ombudsman. Peru’s energy regulatory agency has also fined the Camisea consortia millions of dollars for oil spills, but has yet to collect most of the money. Camisea II, already under construction, is to be managed by a consortium of Hunt Oil (USA), Repsol (Spain), SK Corporation (South Korea) and Marubeni Corporation (Japan). It would transport gas from the Amazon across the Andes and to the Pacific coast for export to US, Mexican and other markets.

The NGO report, Holding the IDB and IFC to account for Camisea II, finds serious shortcomings with the environmental impact assessment for the upstream gas fields connected with the project. Other concerns over Camisea II include: legality of demarcation and the sale of concession rights, inadequate consultation and compensation, intimidation of indigenous and civil society leaders, and contravention of the rights of indigenous peoples including prior consent.

If these banks finance Camisea II, then their safeguards are not worth the paper they are written on

The IFC has now confirmed that its environmental and social lending standards would apply only to the IFC funded components of the project and not to the Amazon gas fields that would supply the liquid natural gas plant. Despite this, IFC president Lars Thunell stated rather incongruously at a meeting with NGOs at the annual meetings in October that IFC involvement would help to protect the critical biodiversity of the Amazon region. “Many of these projects would happen anyway and would be worse without our involvement,” he said. “We can add value”. Amazon Watch has urged the IFC to adhere to its own environmental policy by considering the harmful impacts of Camisea’s upstream “associated facilities” as part of the loan due diligence process.

Civil society groups have urged the banks to delay their decision of project funding, to allow enough time for public scrutiny of the multitude of complex documents prepared by the consortium. Atossa Soltani of Amazon Watch said: “Camisea is a test case of the environmental and social policies of the IDB and World Bank. If these banks finance Camisea II, then their safeguards are not worth the paper they are written on.”