Shell Game

by Stephanie Boyd

New Internationalist magazine, November 2000


Transnationals everywhere are attempting to recast themselves as eco-friendly. But, as Stephanie Boyd discovers, sometimes it's not the way companies behave but the nature of the business itself which is at issue.

They promised this time it would d be different. 'Health, safety and environment' was their motto. A 'green' Shell. A friendly Shell. And even after losing a bid to f develop the Camisea gas fields in the Peruvian Amazon, Shell claimed the experience gave them a revolutionary guide for environmental regulations and social relations that would 'transform mineral exploration in the new century'.

Not surprisingly, both indigenous communities and environmentalists are uneasy about the legacy of Shell's brave new world in the Camisea concessions of the Lower Urubamba Valley - virgin rainforest just 100 kilometres from the famed Manu National Park. Machiguenga, Nahua and Kugapakori natives still lead a semi-nomadic life in this lush and isolated region of biodiversity. Their leaders are not certain whether a transnational giant like Shell can be trusted, but at the same time they feel they have little choice.

Camisea's estimated 600 million barrels of liquid natural gas are worth billions and communities say working with foreign companies is their only chance to get money for social projects. Peru's central government has ignored native people in the Urubamba Valley for centuries - leaving them without schools, health centres or other services. But environmental groups, like the San-Francisco-based Rainforest Action Network (RAN), want gas companies out of the Amazon. They urge Peru to develop alternative energy resources instead.

RAN claimed victory when Shell Oil and its partner Mobil Corp pulled out of Camisea in 1998 after investing $Y.7 billion over two years of exploration. But the real reason the company left was because of a dispute with the Peruvian Government over gas distribution rights and tariffs. Finally last February the contract was awarded to PlusPetrol, an Argentine-led consortium with a bleak environmental record and neither the interest nor the money to invest in social or ecological concerns.

Lelis Rivera, director of the Centre for the Development of Amazon Indigenous Peoples, has worked in the Urubamba Valley with the Machiguenga for 20 years and says local people are prepared for an uphill battle with the new company.

Rivera recalls a Shell executive patting him on the shoulder after the company lost the bid, saying: 'Hey, look, it was worth the trouble fighting all the time because now we have a plan for working with indigenous communities worldwide.'

Rivera says Shell first came to the region in the 1980s, with disastrous consequences. Whooping cough and influenza decimated previously uncontacted groups and sexual relations with indigenous women, including many rapes, left sexually transmitted diseases and the ironically named 'baby Shells'. So when Shell returned in 1996 the communities were prepared. By then nearly all the land under exploration had been legally titled to the Machiguenga and they were well versed in their rights under Peruvian and international law.

Still smarting from the public outcry over its alleged human-rights violations in Nigeria, Shell decided to engage in a little image polishing. Big shots like Washington's Smithsonian Institute were hired, along with a team of Peruvian anthropologists, to handle contact between the company and native people. Shell promised no other company employees would come in contact with locals and agreed not to build major roads, thus preventing an invasion from land-hungry peasants eager to turn the forest into farmland or deal in tropical hardwoods. Everything in and out of Shell's camps, from drill rigs to garbage, was supposed to be transported by air or water.

But the Machiguenga and their advisors were not so easily fooled. They chronicled a series of abuses that first year - including garbage left behind in campsites, abandoned airstrips that were never reforested and dangerous levels of hydrocarbons, cadmium and mercury in local water samples. The study convinced a shame-faced Shell to tighten up monitoring and Rivera says there was marked improvement during the second year.

But there were still unresolved issues. Shell wanted the Government to close a reserve protecting Kugapakori and Nahua peoples and title their land so it could be sold to Camisea. Rivera says this would have been impossible because, in the Nahua and Kugapakori cultures, land is shared among semi-nomadic groups and 'ownership' is not recognized. A sudden introduction to the outside world would also have been devastating.

Shell's belief that everything and everyone is negotiable is wrong, says Rivera: 'There are still places in the world that are not ready to be explored by oil and gas companies.'

Jesus Castro, a young anthropologist who worked as a Shell community-liaison officer, shares many of Rivera's opinions. 'And this was just the exploration phase,' says Castro, pointing out that the construction and operation of natural-gas pipelines have even greater potential for damage. Shell planned to build a massive pipeline snaking through virgin rainforest, ending up in Lima.

'One leak in a pipeline and everything within ten kilometres disappears,' he says. One pipeline explosion in 1989 in Russia, between the towns of Ufa and Asha, blew up two railroad trains and killed 575 people.

The harsh reality facing indigenous groups within the Camisea concession is that although Shell was far from perfect they had a better plan than other companies - including the Argentine consortium now in charge.

Pragmatists applaud Shell's attempts, saying environmentalists need to work with companies in developing greener technology. But in r the case of fossil fuels, even 'green' extraction, production and refining can't ameliorate oil's deadly long-term impact on the planet's environment. And although natural gas may be more ~ environmentally 'friendly' than coal or _ oil, it's still a non-renewable resource.

In a just world the Machiguenga would not have been forced into a position where selling their land - and threatening their way of life - was their only option. And if environmental and social damages were added to the cost (say in some form of tax), projects like Camisea would suddenly seem less profitable and more attention could be focused on developing real green technology.

Wipe away the rhetoric and Shell is still one of the world's top three oil and gas companies and co-owner of such controversial projects as the Bolivia-Brazil natural-gas pipeline which traverses important South American wetlands and forests.

The simple capitalist truism - that corporations exist to make profits - means companies like Shell will invest in the environment and social relations only as long as the game remains profitable. Pragmatists say it doesn't matter as long as the end result is positive. But a false conversion to the faith of sustainable development is as fragile as the Amazon, and likely to be blown away whenever the next consumer fad comes along.


Stephanie Boyd ( pe), a former editor with Latin America Press, now works as a freelance journalist in Lima.

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