Peru Camisea Gas Project

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Peru Camisea Gas Project

• June 7th, 2006

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Agenda

• Current Events
• Peruvian Political Context
• Gas Oil Industry in Peru
• The Project
• The Research
• Stakeholders Analysis
• Examples of Stakeholders Conflicts
• Conclusions Recommendations

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What is going on now?

• Project is in operation phase since 2004
• 5 spills along the pipeline
• Political scandal
• Native communities complains
• Lack of proper food (no fish)
• Cultural Impact

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Spills Location
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Agenda

• Current Events
• Peruvian Political Context
• Gas Oil Industry in Peru
• The Project
• The Research
• Stakeholders Analysis
• Examples of Stakeholders Conflicts
• Conclusions Recommendations

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How much has changed Peru?

• There have been 20 years since discovery of
  Camisea fields. 5 Presidents!

F. Belaunde Government (1980-1985) Peru was just
back to democracy. Neo liberal economy but
economic crisis due to fall down of price of
metal. Inflation currency devaluation
started. El nino natural disaster.
A. Garcia Government (1985-1990) Hyperinflation
reached 7,649 in 1990. Devaluation of currency
Inti, to Sol, to Nuevo Sol (1 Nuevo Sol 1
Billion Intis) Attempt to nationalize bank.
International isolation. Rationalization of
food.
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How much has changed Peru?

• There have been 20 years since discovery of
  Camisea fields. 5 Presidents!

A. Fujimori Government (1990-2000) Drastic
liberal economic reforms. Hyperinflation was
reduced. Macroeconomic stability. Controlled
terrorism. Good international relationships.
Privatization started. Quit the country due to a
political scandal.
V. Paniagua Government (2000-2001) Organized new
elections. Moderate cabinet. Unified
government. Integrated the country.
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How much has changed Peru?

• There have been 20 years since discovery of
  Camisea fields. 5 Presidents!

A. Toledo Government (2001-2006) Drastic liberal
economic reforms. Hyperinflation was reduced.
Macroeconomic stability. Controlled terrorism.
Good international relationships. Privatization
started. Quit the country due to a political
scandal.
A. Garcia Government (2006-2011) Just elected.
People uncertainty. Democracy option.
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Inflation GDP Graphs (annual change )
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Agenda

• Current Events
• Peruvian Political Context
• Gas Oil Industry in Peru
• The Project
• The Research
• Stakeholders Analysis
• Examples of Stakeholders Conflicts
• Conclusions Recommendations

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Current oil/gas status?

• Peru is a source of oil gas.
• Oil production declining (1980200021)
• Use of energy industrial electrical
• Demand 2004 152.3 million cf/day
• Demand 2044 1,579.9 million cf/day
• Demand will grow 10 times in 10 years!
• Camisea fields can satisfy that demand.

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Oil/Gas Fields

• Green With Contracts
• Orange Under Negotiations
• Yellow Available
• Pink Intangible
• White Protected

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Camisea Fields

• Block 88 San Martin Cashiriari Fields
• 10 times other reserves in Peru
• Location Rain forest region of Bajo Urubamba
  Cusco
• Neighbors Nahua, Machiguenga, Manu!

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Camisea Proven Reserves

• Total Energy 2,980 Tera Watts Hour
• Efficiency 55 ? Energy 1,640 TWH
• Energy available 1998 16,7 TWH
• Actual energy 10 times than in 1998!
• Energy equivalent to 2,800 millions of barrels of
  oil.

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Agenda

• Current Events
• Peruvian Political Context
• Gas Oil Industry in Peru
• The Project
• The Research
• Stakeholders Analysis
• Examples of Stakeholders Conflicts
• Conclusions Recommendations

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Background
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Description
UPSTREAM (730M)
DOWNSTREAM(85071M)

• Awarded October 2000
• 33 year contract for
• (Transp.) Gas Camisea ? Lima
• (Transp.) LNG Camisea ? Coast
• (Distr.) Gas In Lima Callao
• Includes (TGP, Tractebel)
• Transp. Pipelines (02)
• 714Km NG
• 540Km LNG
• Distr. Pipeline ? 60 Km

• Awarded on Feb 2000
• 40 years license
• Consortium lead by Hunt Oil
• Includes
• 1. Extraction (8wells)
• 2. Separation (liquid- gas) Las Malvinas Plant
• 3. Fractionation (get commercial products LGP
  condensates) Melchorita Plant

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Camisea Location
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Agenda

• Current Events
• Peruvian Political Context
• Gas Oil Industry in Peru
• The Project
• The Research
• Stakeholders Analysis
• Examples of Stakeholders Conflicts
• Conclusions Recommendations

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Research Questions

• Which are the stakeholders with more power in a
  project?
• Which are the interests that drive stakeholders
  to make decisions?
• When conflicts arise?
• When conflicts can be solved?

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Research Methodology
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Agenda

• Current Events
• Peruvian Political Context
• Gas Oil Industry in Peru
• The Project
• The Research
• Stakeholders Analysis
• Examples of Stakeholders Conflicts
• Conclusions Recommendations

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Main Groups of Stakeholders
Possible Interaction among stakeholders over
500
Possible Interaction among groups 26
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List of Stakeholders
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Stakeholders Interests Analysis
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Stakeholders Interests Analysis
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Stakeholders Interests Analysis
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Stakeholders Interests Analysis
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Stakeholders Interests Analysis
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Agenda

• Current Events
• Peruvian Political Context
• Gas Oil Industry in Peru
• The Project
• The Research
• Stakeholders Analysis
• Examples of Stakeholders Conflicts
• Conclusions Recommendations

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Conflicts
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Community - Community
C-C

• COMARU vs CECONAMA (Machiguengas associations)
• COMARU cautious protective
• CECONAMA pro-engagement for progress
• Conflict 1 gain more power (communities) to have
  more leverage with developer (Shell)
• Conflict 2 How to deal with Nantis. No
  legitimacy of some decisions.
• Strategy Make alliances (i.e NGO CEDIA)

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Developer - Community
D-C

• Communities try to satisfy their interests and
  ask for some benefits to developers.
• Conflicts Arise when interests are not fully
  satisfied. Protests.
• CECONAMA accepted/COMARU asked for Developers
  retirement of the area (2003)
• Result
• Worked with Shell. Strong commitment.

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Government - Developer
G-D

• SHELL Peru (1998). Shell decided not to
  continue with the project.
• Conflict
• Contract already signed established. But
• Shell wanted to modify contract
• Distribution in Lima.
• Free market to Brazil
• Modification Peruvian Electrical Law 1992. (price
  det)
• Result Government did not agree. Shell freely
  decided not to go on.

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Financial Inst - Developer
F-D

• Citibank US Imp-Exp withdraw funds for Camisea
• Conflicts arise when
• I/NGOs appear
• Developers does not fulfill banks environmental
  policies (IDB)
• Result
• No funds. Look for other investors.

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I/NGO - Developer
N-D

• CEDIA AMAZON WATCH
• Actions web page, protests, field visits and
  preparation of reports.
• Goal Damage developer reputation.
• Result Developers have managed I/NGO attack.
  But they may got delays in order to get new
  investors.

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I/NGO Financial Inst.
N-F

• When opposition of interests is strong I/NGOs try
  to stop projects cutting the funds.
• Worldwide campaigns, letters, protests.
• Example RAN vs. Citibank
• Citibank was called the most destructive bank in
  the world. Strong campaign.
• Citibank leaders negotiated in person with RAN
  leaders in order to stop campaigns.
• Citibank did not provide funds to Camisea.
• Strategy Worked. Reputation matters

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Agenda

• Current Events
• Peruvian Political Context
• Gas Oil Industry in Peru
• The Project
• The Research
• Stakeholders Analysis
• Examples of Stakeholders Conflicts
• Conclusions Recommendations

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Conclusions

• Stakeholder engagement plan (developed by Shell)
  worked.
• Conflicts of interests can be managed but if
  differences in missions or cultural-cognitive
  elements exits, consensus would be difficult to
  reach.
• Developers have more power if relationship with
  government is strong.
• NGO better influence a project by impacting
  financial institutions
• Rivalry among communities benefits developer.

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Recommendations

• Developers should show strong commitment with
  environmental and indigenous issues.
• Developers should be aware of the institutional
  conflicts among stakeholders.
• Developers should create legitimacy.
• Financial institutions should have strong
  environmental policies.

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The End QUESTIONS?