Peru Begins Construction on Natural-Gas Pipeline

Thursday December 18, 2014
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Peru has announced that work on the Gaseoducto Sur Peruano (GSP) gas pipeline is underway and that the pipeline soon will be a reality. The government agency responsible for contracting the project, ProInversion, made public in June of this year that a partnership between a Brazilian construction company and a Spanish natural-gas transportation company had won the bidding competition to build the line. Their partnership, called Gaseoducto Sur Peruano which gave name to the pipeline, will help to bring natural gas to the cities of Cusco, Apurimac, Puno, Arequipa, Moquegua and Tacna from the gas fields of Camisea in central Peru. The GSP pipeline will stretch 600 miles. GSP the partnership has a 34 year concession on the pipeline.

According to the Ministry of Energy and Mines (MEM) the bidding process was solid and transparent with a total of 20 companies taking part. The initial 20 were later consolidated into two consortiums of seven companies elected to the final stage of bidding. Problems arose when one partnership claimed their proposal was unjustly rejected by an un-fair bidding system.

The GSP gas pipeline is the plan by the current presidential administration to build a pipeline to service southern Peru with natural gas from the Amazon. The previous administration had already formed plans for a similar pipeline, Gasoducto Sur Andino, which were canceled by the current administration which judged them inconsistent with the national interest. The current administration, Minister of Energy and Mines Eleodoro Mayorga Alba explains, updated and improved the previous administration’s plans which is why they are “different and better.”

Mayorga states that “The total cost of service was estimated at US $7.3 million. This includes not only the investment, as was the previous project’s case, but the operation and maintenance costs, income taxes, among others, for the next 30 years.” Mayorga also emphasized that that the reserves for the initial project are available from block 88, not from block 58.

The announcement of construction on the pipeline comes as a sad day for many indigenous groups and environmental organizations that protested its construction and the continued development of the 58 and 88 blocks. Over half of block 88, from which the GSP pipeline will draw its gas, overlaps with a reserve for indigenous peoples who live in ‘initial contact’ and ‘voluntary isolation.’

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