Inter-American Development Bank approves $400 million loan for Peru gas project

The Inter-American Development Bank, IDB, approved a $400 million loan for Peru’s Camisea gas project today, brushing off appeals from environmentalists who insist it will do irreparable harm to the fragile jungle eco system and its indigenous inhabitants. The project consortium, headed by Texas-based Hunt Oil, will use the loan to begin construction of a natural gas liquefaction plant on Peru’s pacific coast. It will also create a marine terminal and a 253-mile, 34-inch, or about 86-centimeter, pipeline connecting the plant to the Transportadora de Gas del Peru pipeline.

According to the IDB, the project is expected to generate an average of $230 million a year in incremental royalties and $90 million in income tax revenue for the Peruvian government. At a total cost of $3.9 billion, the project is the biggest private investment in Peru’s history.

The Camisea gas fields are located in Peru’s south-eastern Amazon basin. It is the largest energy project in Peruvian history and known to hold some of the largest undeveloped gas reserves in South America.

But it has also been criticized as one of the most damaging projects in the Amazon basin by San Francisco-based Amazon Watch. Critics say it has contaminated a biodiversity hotspot and infringed on indigenous land causing health and social problems for thousands of native people.

IDB project team leader, Martin Duhart, responded to concerns saying “the Bank’s participation in this project contributes significantly to the environmental and social management plans and systems of the companies, especially in terms of investments in community development and environmental protection.”

The U.S. Export-Import Bank and World Bank are scheduled to announce similar loan decisions in late December and mid-January respectively.

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