Frontline World

Peru - A Gamble in the Jungle, August 2003
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Introduction: Landing in the Amazon
San Martin 1: Deep Wells in the Rain Forest
Kiteni: Boomtowns Spring Up
Shimaa: Landslides and Confrontations
The Pongo: Passing Into Another World
Chocoriari: Fuel Spills Into the River
Segakiato: A Strange New Economy
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Far beneath the rain forest lies South America's largest natural gas reservoir

On August 28, 2003, the U.S. Export-Import Bank voted against the $214 million in loan guarantees for the Camisea project.

An old cargo helicopter follows the bends of the Urubamba River from above, then sets us down on a bald hilltop deep in the Peruvian Amazon. Rotor wash whips the fronds of royal palms that sit just beyond a gravel pitch. We pile off the chopper to see Machiguenga Indians in jumpsuits working near the steel neck of a drilling rig that stretches 170 feet into the air, higher than the rain forest canopy.
Jason Felch and Chris Raphael

Jason Felch and Chris Raphael completed their master's degrees at the University of California at Berkeley's graduate school of journalism in spring 2003. They were selected as FRONTLINE/World Fellows in June of the same year.

We've landed in the heart of the Camisea River valley, an isolated region about 300 miles east of Lima. The Camisea is home to thousands of indigenous people, including several of the Amazon's last un-contacted tribes. The most populous indigenous group in the Camisea is the Machiguenga people, who have long served as a bridge between their more isolated neighbors and the modern world and are well know outside Peru thanks to Mario Vargas Llosa's world-acclaimed novel The Storyteller.

The Lower Urubamba River basin, where the Machiguenga live, has been largely protected from outsiders by a wall of mountains and impassable river gorges. Although change has spilled into some areas of the valley over the last few generations, life in great swaths of the forest is still lived much as it was 1,000 years ago. But with the discovery of a world-class natural gas field here, change now comes in a deluge. A mile below the red clay mud of this hilltop lies an 11 trillion-cubic-foot source of both hope and fear.

The story of what's happening in the Camisea today -- and what may happen in the next few years -- is part of a much larger story involving the tradeoffs between rising energy needs on the one hand and concerns over the environment and the fate of native communities on the other. The oil companies say the story of the Camisea Project is going to have a happy ending and that the Camisea's gas is too important to leave underground.

The Camisea Project, a project to extract and market natural gas from Peru's Camisea field, was begun by Shell Oil Company in the 1980s. Today it is operated by a consortium of eight smaller multinational companies, and led by Pluspetrol, Transportadora de Gas del Perú (TGP) and Hunt Oil. The multi-billion dollar project promises to make this poor Andean country energy independent, but also to turn it into a key supplier of liquid natural gas (LNG) to the United States. Nearly a quarter of all U.S. energy needs are already met by natural gas and most new power plants rely on it. Energy analysts believe gas usage in the United States will surpass petroleum (now 39 percent of the energy mix) over the next 25 years.

We traveled to the Camisea field in spring 2003, as two multinational development banks, the Inter-American Development Bank (IADB) and the Export-Import Bank, were considering financing of more than $300 million for the project. The Bush Administration appointed the U.S. representative to the IADB, Jose Forquet, and nominated the head of the Export-Import Bank, Phillip Merrill. The administration also has close ties to two U.S. companies involved in the project, Hunt Oil Company and Halliburton's Kellogg, Brown and Root. A decision to approve the loan by IADB, expected in August 2003, is likely "to attract other investors, who may conclude that the stringent IADB social and environmental standards make the project more sound," according to Daniel Drosdoff of the IADB.
The shadow of a helicopter appears on the banks of the Camisea river.

The shadow of a helicopter appears on the banks of the Camisea river. Many Machiguenga fear that the Camisea project may leave a permanent and irreversible imprint on their land.

But extracting the gas with only minimal damage, as the consortium promises, will be a difficult balancing act. The region is among the richest in diverse species of any other area in the world, and nearly 10,000 indigenous people live there. The consortium insists that a combination of technology and community development projects will minimize destruction and help the Indians "join the modern world."

"We think we're doing it right," says Carlos del Solar, general manager of Hunt Oil's Peru operations. "...We have done everything by the book. (We're) following World Bank standards in the way we treat the environment." But environmentalists and indigenous groups fear that further development of the natural gas field could permanently alter the environment and the Machiguenga way of life. In spring 2003, we took a 10-day journey into the heart of the Camisea by plane and helicopter, car and bus, canoe and foot. We set out to answer the key question posed by the Camisea Project: Can petroleum companies -- whose legacy in the Amazon rain forest is one of deforestation, oil spills and the devastation of indigenous communities -- get it right this time around?

NEXT: San Martin I - Deep Wells in the Rain Forest

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FRONTLINE/World Fellows
Part of the Web-exclusive FRONTLINE/World Fellowship program. FRONTLINE/World is exploring partnerships with some of the leading graduate schools of journalism around the United States with the goal of identifying and developing the best of an emerging generation of journalists. The FRONTLINE/World Fellowship program is supported by Carnegie Corporation of New York.
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