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Viewing cable 06LIMA4321, PLUSPETROL, ACHUAR AND GOP END AMAZON CONFLICT

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Reference ID Created Released Classification Origin
06LIMA4321 2006-11-09 14:57 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Lima
VZCZCXYZ0000
PP RUEHWEB

DE RUEHPE #4321/01 3131457
ZNR UUUUU ZZH
P 091457Z NOV 06
FM AMEMBASSY LIMA
TO RUEHC/SECSTATE WASHDC PRIORITY 2926
INFO RUEATRS/DEPT OF TREASURY WASHDC
RHEBAAA/DEPT OF ENERGY WASHDC
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHBJ/AMEMBASSY BEIJING 0377
RUEHBR/AMEMBASSY BRASILIA 7059
RUEHBU/AMEMBASSY BUENOS AIRES 2650
RUEHSG/AMEMBASSY SANTIAGO 0930
RUEHBO/AMEMBASSY BOGOTA 4067
RUEHLP/AMEMBASSY LA PAZ NOV QUITO 0790
RUEHCV/AMEMBASSY CARACAS 9884
UNCLAS LIMA 004321 
 
SIPDIS 
 
STATE FOR EB, WHA/AND, WHA/EPSC, EB/ESC, OES 
TREASURY FOR A. JEWELL, J. LEVINE 
STATE PASS TO EXIM - A. FOLEY, C. O'CONNOR, R. WILLIAMSON 
DEPT OF ENERGY FOR PUMPHREY/LADISLAW;DOBRIANSKY/RICHARDS 
ENERGY INFORMATION ADMINISTRATION FOR CHARLES ESSER 
DEPT PASS TO INT/USGS/RESTON FOR D. MENZIE/A. GURMENDI 
USAID FOR LAC, EGAT 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EPET ENRG EINV SENV PE
SUBJECT: PLUSPETROL, ACHUAR AND GOP END AMAZON CONFLICT 
 
1. (U) SUMMARY.  Argentina's oil company Pluspetrol, the GOP and the 
regional government of Loreto signed an agreement October 22 with 
the Achuar indigenous communities of Peru's Amazon to end a 
three-week environmental and social conflict. The Achuars, supported 
by local and international NGOs, had occupied five production fields 
to pressure the GOP and Pluspetrol.  Pluspetrol will cease dumping 
contaminated water into the Corrientes River earlier than it had 
previously agreed.  The GOP and the regional government agreed to 
take responsibility for decontaminating the area, developing a 
comprehensive health and development program, and providing 
temporary food and drinking water to the Achuar. (Note: Pluspetrol 
is the operator of the Camisea gas fields.  End Note.) 
 
2. (SBU) Pollution in the area dates back over 30 years, long before 
Pluspetrol's involvement, and the Achuars' concerns were 
acknowledged as genuine.  Participants and observers, while 
acknowledging serious pollution, noted that the communities' 
fundamental concerns were lack of access to tax canon funds and the 
failure of the state to provide jobs, education and health care. 
The role of a Peruvian NGO in the dispute may have built impetus 
behind legislation that would better control NGOs. END SUMMARY. 
 
ACHUAR BESIEGE OIL FIELDS 
------------------------- 
3. (U) The Achuar indigenous communities living in the Corrientes 
River basin in Peru's northern jungle have long protested pollution 
by oil spills and salty production water discharged into the rivers 
and ponds where they fish, with little response from the GOP.  After 
demonstrations in July 2006 in Peru's main Amazon jungle city, 
Iquitos, they began to lobby the Peruvian government and Congress. 
With the help of a Peruvian environmental NGO, Racimos de Ungurahui, 
they occupied several of operator Pluspetrol's oil fields, 
preventing the company from producing.   Pluspetrol estimated that 
it was losing $2.4 million per day in sales revenue.  Pluspetrol 
Norte is a consortium operated by Argentine firm Pluspetrol (55 
percent) and with participation by the Chinese state oil company (45 
percent.) 
 
4. (SBU) The Achuars complained that their main sources of food, 
fish and game had been affected by leaking oil and associated water 
discharge (which is hot, oily and briny) dumped into area waters by 
the operators of concession Blocks 8 and 1-AB.  Peru's state oil 
company Petroperu originally developed Block 8 while Occidental 
Petroleum developed Block 1-AB, both over 30 years ago. Both dumped 
contaminated water into rivers and lagoons from the start of their 
productions; in Petroperu's sites there were several oil spills. 
Firms familiar with these blocks told us that this area features one 
of the highest water to oil extraction ratios in the world, with 10 
barrels of water for every barrel of oil extracted.  Re-injection 
technology is expensive, those firms said, but in other countries 
oil companies are required to re-inject the water produced. 
 
5. (U) By mid-August, the press reported that Energy and Mines 
Minister (MEM) Juan Valdivia said the ministry met with Pluspetrol 
(operator since 1999 for Block 1-AB and 1996 for Block 8) to 
encourage it to accelerate plans to re-inject the contaminated 
water.  Soon after, Pluspetrol reported that it was currently 
re-injecting about 210,000 barrels per day (bpd) of contaminated 
water, and planned to re-inject 100 percent (approximately one 
million bpd) by December 2009, according to MEM sources. 
 
6. (U) After more consultations in early October among the relevant 
GOP agencies, the regional government of Loreto and Pluspetrol 
officials to discuss the Achuars' demands, the parties signed an 
agreement on October 13.  Both MEM Minister Valdivia and Health 
Minister Carlos Vallejo participated.  However, the media reported 
that a national NGO, Racimos de Ungurahui -- advisor to the Achuars 
-- recommended that they not abide by their agreement and keep the 
blockade until Pluspetrol and the GOP agreed to advance the deadline 
to cease water dumping in Block 8 to July 31, 2008 (from December 
31, 2008, in the October 13 agreement). 
7. (SBU) Minister Valdivia and others have told us of their private 
frustration with the behavior of Racimos de Ungurahui in this 
negotiation. He complained that the president of Racimos, Lily La 
Torre, had not acted on the GOP's invitation to participate in the 
talks that resulted in the initial settlement and then immediately 
tore apart the accord from the sidelines. 
 
DEVELOPMENT DEAL FOR THE ACHUAR 
------------------------------- 
8. (U) The GOP and the Loreto regional government also agreed to 
initiatives including a comprehensive health program and development 
plan; responsibility for cleanup of the polluted areas; and 
temporary delivery to the Achuar of food and drinking water.  The 
Health Ministry agreed to evaluate water quality in the area every 
three months.  Pluspetrol agreed to train and pay indigenous 
environmental monitors.  In addition, the MEM decreed that not less 
than five percent of the Regional government oil canon be used to 
directly benefit the communities.  The Achuars agreed to leave the 
five production fields once Minister Valdivia signed the agreement, 
and to channel any further claims through the government's 
Ombudsman's Office.  Pluspetrol confirmed that the Achuar have 
ceased their blockade and oil production has resumed. 
 
POLLUTION IS REAL, BUT THE 
CONFLICT MAY BE OVER 
DEVELOPMENT 
---------------------------- 
9. (SBU) Representatives of U.S. firm Arcadis have a $21 million 
contract to remediate environmental damage in Block 8. They told us 
that the pollution is severe, with some lagoons many feet deep in 
accumulated oil.  They noted that the state did nothing to require 
remediation over the many years that Petroperu polluted the area; 
similarly, Pluspetrol was not required to reinject the water and 
took little action on its own to remediate.  Arcadis told us that 
while the Achuar are aware of pollution issues, what they most want 
are jobs and basic services that they have never received.  ArcadiQ 
representatives described its extensive corporate social 
responsibility program -- employing area residents and providing 
health care -- and noted thQ Pluspetrol could act more proactively 
in providing the same. 
 
10. (SBU) Carlos Canepa, the chairman of the Congressional Committee 
on Amazonia, Indigenous Peoples and the Environment reported to us 
on his participation in the talks with the Achuar. He noted also 
that while pollution issues are real, the core problem for the 
Achuar, as they explained it to him, was lack of development.  He 
reported that of over one million dollars in gas "canon" taxes that 
are reserved for regional and local development, not one dollar had 
found its way to development projects for the Achuar.  Canepa said 
that the national, regional, and local governments had ignored 
development needs for years; the core aim of the oil fields takeover 
was to get the jobs, health care and education that the Achuar 
lacked. 
 
OPPOSITION TO OIL ACTIVITIES 
IN OTHER AREAS 
----------------------------- 
11. (SBU) The Achuars stated in the agreement that they do not want 
the GOP to grant new oil exploration and production concessions in 
their territories.  They have opposed the start up of exploration 
and production by Burlington Resources (a subsidiary of 
ConocoPhillips) in Block 104 (Septel reports the September 29 
exploration and production agreements between Conoco and the GOP), 
and of Canada's Petrolifera Petroleum in Block 106, both near Block 
8.  Although initially GOP officials maintained that it was the 
government's sole prerogative to grant oil and gas concessions, a 
few days later Minister Valdivia told the local media that oil 
operations need a favorable "social license." 
 
12. (SBU) COMMENT: The role of NGO Racimos in the dispute may have 
built impetus behind the bill (Septel) that the GOP submitted to the 
Peruvian Congress in late October, seeking to restrict the 
 
activities of Peruvian and international NGOs. 
STRUBLE