Case Study: Natural Gas Project in Peru

Abstract

The Camisea Natural Gas Project, Peru’s largest energy development project, sparked national hopes and expectations with its promise of economic development and a path toward energy independence. The Project was expected to boost Peru’s GDP by nearly a percentage point, and lead to the commercialization of secondary gas products, generating conditions favourable to developing a national petrochemical industry. But the US$1.6 billion Project to exploit Peru’s largest gas reserve — 13 trillion cubic feet — carried with it significant potential for damaging impacts. The Project threatened vulnerable communities and ecosystems from the lower Urubamba River valley in the upper Amazon basin, a region of extraordinary biodiversity and home to several indigenous peoples, through the Andes, to the Peruvian coast and the buffer zone of the Paracas National Reserve, Peru’s only protected marine area. Finally, the fact that Camisea was intended as the project that would open the Peruvian Amazon to a new era of oil and gas development meant that this Project would set precedents for the management of future projects. Concerns about these issues motivated a broad civil society coalition within Peru and internationally to seek to influence the Project’s management by advocating for the resolution of key problems before it could receive financing from the US Export-Import Bank (Ex-Im Bank) and the Inter-American Development Bank (IDB).