Exploitation of Peru's 'miracle' oil deposits in the Amazon is delayed

Operations by company Perenco behind schedule as Peruvian NGO publishes critical report

David Hill

theguardian.com, Tuesday 30 July 2013 16.19 BST

The controversial exploitation of heavy crude oil from one of the most inaccessible, most biodiverse regions of the Peruvian rainforest inhabited by indigenous people in "voluntary isolation" has been delayed.
Anglo-French oil company Perenco, partnered by Vietnam's state oil company, PetroVietnam, was scheduled to start producing oil this month, but Perenco's head of communications, Nicolas de Blanpré, now says that "production is expected to start later in 2013."
When the oil was declared commercially-viable in December 2006, before Perenco became involved, Peru's then president Alan García visited the region, called the oil a "miracle", and said it would turn Peru into a net oil exporter and save the country US$1bn a year.
Others were equally positive, with Aurelio Ochoa, later the chairman of Perupetro, calling it the "biggest energy discovery in Peru's history after the Camisea gas fields" and the then Minister of Energy subsequently saying it had reignited interest in exploring for oil in Peru.
Perenco took over operations in January 2008 and now intends to drill 185 wells and build a 207km pipeline to exploit an estimated 217 million barrels of oil, but the company's activities have consistently attracted controversy.
According to a recent report by Peruvian NGO CooperAcción, the oil in this region is "one of the most important hydrocarbon deposits in the country" and Lot 67, as Perenco's concession is known, is "coming to attract increasing attention."
Although attention has tended to focus on whether operations will impact on the indigenous people in "voluntary isolation" – for whom Perenco claims there is "no evidence" – CooperAcción highlights the potential impacts on the environment and other indigenous people in the region.
"Our main aim in writing this was because investment in the Amazon is growing at an accelerated rate but it's not as visible as other parts of Peru," says director José de Echave. "This affects the rights of indigenous peoples. It's as if their territories are empty."
According to the report, titled El Caso Perenco: Expansión Petrolera y Pueblos Indígenas en la Amazonía, the creation of Lot 67 in 1995 by Peru's government violated an international law intended specifically to protect indigenous peoples' rights:

Perenco is operating in Peru without having gone through the appropriate consultation processes with the indigenous population. The negotiation has only been between the company and the authorities, excluding the indigenous peoples from the decision-making processes. This reflects the failure to implement the [international law] ILO Convention 169 – ratified by Peru in the mid-1990s – and clearly illustrates the violation of indigenous peoples' rights to free, prior and informed consent.

But Perenco's de Blanpré defends the company, saying it "has respected, complied and fulfilled Peruvian regulation referring to public participation and consultation" and that it is the government's responsibility to ensure the law is respected. According to de Blanpré:

[The company] has conducted several consultations with all the local native population and communities. This was all confirmed by the highest Peruvian board of justice, the Constitutional Tribunal. It's worth mentioning that the regional president and the leaders of the surrounding communities – Buena Vista, Flor de Coco, Shapajal, Bolivar, Urbina – signed with Perenco an Act of Social and Environmental Commitment in December 2012.

Although Lot 67 is in a region inhabited by the indigenous people in "voluntary isolation" and only overlaps one titled, now abandoned indigenous community, CooperAcción argues many other indigenous communities – many of them Kichwa – will be affected.
Until the pipeline is built, an estimated 7,000 barrels of oil are scheduled to be transported every day from Lot 67 along rivers crucial to these communities' survival, generating "obvious risks", making accidents possible and hunting and fishing more difficult, the report states.
Although El Caso Perenco acknowledges that the company has made agreements with a number of communities and instigated various "social projects", leading to "a scene of relative calm", it states that there has been conflict in the past.
In May and December 2009 there were protests – one of which was broken up "violently" by the Peruvian navy – and last November 38 Perenco workers were detained by members of one community, Urbina, after an incident involving a snake, the report states.
But Perenco's de Blanpré defends the company's relationship with the communities, saying that it has set up "agricultural projects", aims to educate students by supporting a technology institute, and runs a "famous hospital barge."
"Perenco works with all the communities involved directly or indirectly in the Block 67 project and we have developed through sustainable projects a good relationship that allow us to work in good harmony," de Blanpré says.
CooperAcción's report expresses particular concern about the pipeline, claiming it will affect roughly 20,000 people and cross territory belonging to the Achuar, Arabela, Kichwa and Quechua – some of whom, the report states, have not been informed or consulted about it.
The report also highlights the fact that the pipeline is due to run for 30.2kms though the supposedly "protected" Pucacuro National Reserve, and research by NGO E-Tech International which claims that it will be almost twice as wide as industry "best practice."
But according to de Blanpré, the pipeline is "above the national environmental standards" and Perenco has been given the go-ahead by SERNANP, the government body responsible for "protected natural areas" such as the Pucacuro Reserve. He says:

We've taken an extremely sensitive approach to our development plan and are implementing a number of firsts in the country to comply not only with local regulation, but beyond it. A workshop in Iquitos [the region's biggest town] allowed for the improvement of the design of the pipeline construction, in agreement with the SERNANP. As a result, the Master Plan of the reserve, approved in March 2013, includes the pipeline to be in conformity with all reserve preservation requirements.

Lot 67 is in the very north of Peru near the border with Ecuador and surrounded by other oil concessions, including Lot 39 operated by Repsol, Lot 117 by Petrobras and Lot 1-AB by Pluspetrol, all of which have attracted controversy in recent years.
The new pipeline is scheduled to connect to the northern branch of the existing North Peruvian Pipeline (NPP), built in the 1970s, which will transport the oil from Lot 67 all the way to a terminal on Peru's Pacific Ocean coast.
In August 2012 Peru and Ecuador agreed that the latter could transport oil via the NPP too, and just three months later Ecuador opened a new bidding round for oil concessions totaling millions of hectares in its south-east Amazon.
Luis Manuel Claps, an independent consultant named as El Caso Perenco's author, says:

This was an attempt to contribute to an understanding of the bigger picture of the implications of Perenco's plans in Peru as well as further oil developments on the Ecuadorian side of the border. Unfortunately, there is no governmental authority with the capacity nor the competence – nor the interest? – to evaluate the cumulative impacts of these developments and their ramifications in terms of human rights and the environment.

El Caso Perenco calls the issue of the indigenous peoples in "voluntary isolation" a "concerning" one and states that it "must be urgently evaluated", arguing that they "could be made extinct" if Perenco's and other companies' operations go ahead.
In 2003 Iquitos-based indigenous organization ORAI proposed the creation of a reserve for the "isolated" indigenous people that would entirely overlap Lot 67 and parts of other concessions, but to date no reserve has been established.
Four years later national indigenous organization AIDESEP appealed to the Inter-American Commission on Human Rights (IACHR) to help protect the "isolated" indigenous people, but Peru's Ministry of Justice and Human Rights is urging the IACHR to close the case.
Earlier this year, on 7 April, a helicopter flying from Iquitos to Lot 67 crashed and killed all 13 people on board, including one Perenco employee and the representatives of three contractors, according to the company.