Peru Goes Beneath the Shell
by Pratap Chatterjee
Multinational Monitor, May 1997
The highland forests near this tiny, remote indigenous village
in central Peru's Urabamba region are abuzz every day with several
large, black ex-army Chinook helicopters, Soviet-designed Antonov
aircraft and an Angolan hovercraft named the Manta.
Such commotion is a recent development. The Machiguenga peoples
have hunted and fished here for 5,000 years. Close by live the
Kugapakori peoples, who have lived in fierce, self-imposed isolation
from the rest of the world.
Below the forests is a gas field which the oil giant multinational
Shell has named Camisea. Shell geologists estimate Camisea contains
11 trillion cubic feet of natural gas and 600 million barrels
of liquid natural gas, enough fuel to meet the capital city of
Lima's energy needs for a century. The company has already drilled
a first well to tap the area's riches, and it plans on drilling
three more. Shell says it is taking great pains to design a model
of environmental management and local participation. It has also
welcomed input from interested observers or experts. "We
need criticism from the outside," says Alan Hunt, the chief
executive of Shell in Peru.
The company is especially sensitive following blistering international
criticism in the last two years of its Nigerian operations. Shell's
oil drilling in the Niger delta has caused massive environmental
destruction, and the company has closely associated itself with
the Nigerian government, which has brutally suppressed the region's
Ogoni people, including with weapons purchased by Shell.
Shell as good neighbor
Shell first worked in this region more than a decade ago when
it drilled a series of wells in an effort to find petroleum. The
company withdrew in 1986 when it found only natural gas and failed
to strike an agreement with the Peruvian government.
Local leaders allege that, at the time, Shell contract workers
abused local women. Human rights activists and environmentalists
say that the Shell operations attracted outside loggers who brought
diseases that killed a major part of another indigenous community
of Nahua peoples who have lived in isolation for centuries.
This time around, the company says that it will obtain the
permission of local people before doing any work; it will not
build any roads, so as to prevent the intrusion of settlers, loggers
or miners; it will forbid hunting and fishing by all staff; it
will employ the best available technology to ensure minimal pollution;
and it will clean up every last scrap of waste.
The company has hired the Smithsonian Institute in Washington
to map local plants, mammals, insects and aquatic systems at each
clearing. To prevent social problems Shell has hired one of the
leading experts on the local indigenous peoples, Peruvian anthropologist
Alonso Zarzar, to help the company work with the communities.
Zarzar has prepared detailed guidelines for Shell and has
conducted workshops to ensure that the company's 360 local and
expatriate contract workers do not violate local customs or engage
in disruptive practices. Shell is also seeking to ensure that
all its workers and visitors are vaccinated against diseases that
might spread to local communities.
To reduce its impact on surrounding forests, the company delivers
all its supplies by plane or barge to Nuevo Mundo, a small riverside
village. Here, 300 contract workers are completing a new airport
and a command center for the company's work in the region. From
Nuevo Mundo, smaller craft transport materials to the wellheads,
which are two days upriver or a short helicopter ride away.
At the wellheads, several hours walk from the nearest river,
giant yellow earth movers have begun to excavate hill sides. Eventually,
the company plans to build a pipeline through the forests and
over the Andes to Lima, approximately 500 kilometers to the west,
and perhaps another pipeline to Cuzco. There is also talk of transporting
the gas to Bolivia, where it could be piped to Brazilian metropolises
such as Sao Paulo and Rio de Janeiro through a pipeline being
built by Texas-based Enron.
The kinder, gentler Shell's efforts notwithstanding, charges
of environmental damage have already trickled in, even before
any natural gas has been pumped out of the ground. Peruvian activists
also say that despite the hiring of a leading anthropologist,
local people have no idea of what is happening at the drilling
site or what future operations might involve.
The people of Cashiriari started complaining shortly after
Shell set up operations late last year. One villager, Pilar Vargas,
says that the Cashiriari River, which is normally chocolate-brown,
now occasionally turns black. "We also have trouble hunting
and fishing," she says. "It took us just two hours to
hunt for animals before the operations began. Now, it takes a
day and a half" due to the decline in wildlife.
One possible explanation, suggested by an environmentalist
visiting the area, is that, apart from a few token trees, Shell
has no erosion controls on its operations, which are situated
in the headwaters of the Cashiriari and Camisea rivers.
Shell's technical manager Tom Kelly defends the work on the
site. "We have only been moving earth for a few weeks. We
have plans to protect the site from erosion," he says.
Other Shell representatives say that animal scarcity may reflect
human population pressures. "We have studies going back to
the 1970s which document complaints about fishing and hunting
declines," says Miguel Ruiz-Larrea, a Shell ecologist. "I
don't want to say that our helicopters and cutting operations
are not having an impact, because it is clear they do have some
impact. But I think there are a number of other factors involved."
The company says it will begin to plant the native cetico
tree on the land it no longer needs, although local people say
they would prefer a mixture of local species. "We would like
to plant other trees, but we don't have seeds for other local
trees like sapote and shimbillo," says Ruiz-Larrea. "In
any case, cetico is what grows naturally and quickly in cleared
Environmentalists say that the current problems are minor
compared to what will occur when Shell begins the actual extraction
of natural gas. The company will simply extract test quantities
of gas over the next two years, and hopes to begin full-scale
production by the end of the century.
Waste material from the wells could contain heavy metals such
as arsenic, cadmium, lead and mercury, which are highly toxic.
It could also contain suspected carcinogens, including poly-aromatic
Natural gas escaping from the well may have to be burnt off
in massive flares, while pressurized gas pipelines run the risk
of explosions-not infrequent occurrences even in countries like
the United States where the industry uses the best available technology.
A Shell spokesperson promises that the company will take all
possible precautions to prevent problems. Initially, he says,
all wastes will be treated. Eventually, the company plans to reinject
wastes deep below the water table, where he says they will not
contaminate the local environment. To date, however, the company
has not conducted safety audits of its operations. Nor is it equipped
to deal with any major catastrophe. A small indication of what
might happen in the future occurred this February when Shell staff
brought in fuel oil by barge to Nuevo Mundo for four new steel
storage tanks at the base.
Although the amount of oil being delivered was modest, five
oil spills occurred in the river, and twice as many on land. One
of the barges was taken out of service because of recurring problems.
From the Nuevo Mundo base, the fuel oil is being transported to
the wellhead in large tanks winched under the helicopters; these
tanks routinely spill as they are dragged along the ground.
Shell officials have a detailed emergency response plan on
paper, but they do not have professional clean-up equipment such
as skimmers, booms and buckets available. Nor does the company
have any professional staff here to respond to emergencies. After
the February spills, local people were pressed into emergency
service, using makeshift equipment to mop up the mess. Contaminated
soil was dug up and stored on site. Workers say that when it rains,
rainbow sheens run through the soil.
The local communities, which have never experienced these
problems before, are not quite sure where to turn.
In exchange for the two hectares of land for the first well
in Armihuari, the company has promised the village of Cashiriari
that it will supply electricity for three communal houses, as
well as tin roofs and medicines.
The land-use agreement (Shell admits that it has used more
than agreed initially) does not guarantee any compensation in
case of accident, contamination of the local rivers, or destruction
of the forests. Tomas Vargas, the treasurer of the village who
also runs the local health clinic, argues that the company representatives
took advantage of the local community, which did not realize it
ould ask for any of those guarantees.
Nuevo Mundo is receiving little more than Cashiriari. Shell
has agreed to pay the community $1,600 a month for the right to
construct an airport to receive flights directly from Lima to
service the company's operations center situated next to the village.
Shell arranged the Nuevo Mundo deal with Alquilino Rios, a
local leader. Other local leaders, including Efrain Barazo and
Job Korinti from the neighboring village of Kirigueti, have bitterly
criticized the agreement. They suspect the company of making plans
to encroach on their territory. "The Shell maps showing the
territory of Nuevo Mundo include an old gas well called Mipaya
that is on our land," says Korinti. Shell officials, however,
say they have no immediate plans to exploit Mipaya.
Doris Balvin, a Peruvian environmental lawyer who tracks the
impact of mining operations, says that the compensation packages
amount to little more than Christmas presents. In January, she
visited the communities around Camisea and translated Shell's
maps from English to Spanish for local leaders like Tomas Vargas.
"If Shell really wanted to work with the communities,
why have they not provided them with enough information?"
The agreement was signed in a hurry and the local people had no
chance to consult a lawyer," she says.
Anthropologist Zarzar defends the agreement. "It is extremely
hard to work in this area," he says. "For example, the
communities keep their hunting grounds secret from other communities
in order to protect scarce resources. How are we to decide what
just compensation to give them when we cannot determine the exact
impact on their life?"
"It's my job to ensure that Shell provides appropriate
benefits to the community," he adds. "We have to make
sure that all the compensation will help the community as a whole
and to make sure that we develop social capital for the long term
Zarzar agrees that the communities have a right to a lawyer,
but he says it is up to their leaders to get such help. "I
even attended the regional meetings of the Machiguenga organizations
to tell them about our plans months before this agreement was
signed," he points out.
Meanwhile, the activities of Shell have exacerbated existing
divisions among the Machiguenga, who have traditionally been represented
by rival organizations. The villages of Camisea, Nuevo Mundo and
Segakiato are represented by the Center for Native Machiguenga
Communities, while the three other villages in the region-Cashiriari,
Kirigueti, and Shivankoreni - are represented by the Council for
the Machiguenga People of the River Urabamba (COMARU).
Shell helped create an "indigenous council" with
these two groups as well as other local, indigenous, non-governmental
groups. The plan fell apart recently when COMARU withdrew from
the council, increasing tensions among the communities. "We
wanted to work with the communities in devising a mediation system
to settle any complaints, but so far, we have not succeeded,"
admits a Shell spokesperson.
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