FINAL REPORT OF ENVIRONMENTAL AND SOCIAL DUE DILIGENCE DURING CONSTRUCTION OF THE CAMISEA PROJECT, PERU

Transcription

1 FINAL REPORT OF ENVIRONMENTAL AND SOCIAL DUE DILIGENCE DURING CONSTRUCTION OF THE CAMISEA PROJECT, PERU 1. INTRODUCTION: This Final Summary Report summarizes the Environmental and Social Due Diligence activities completed by URS Corporation for the Camisea Gas Development Project (Camisea Project) in Peru on behalf of the Inter-American Development Bank (IDB) and the Corporación Andina de Fomento (CAF) (collectively the Lead Arrangers or MLAs ). URS initial scope of work focused on completing an Environmental and Social Due Diligence Assessment of the Downstream Portions of the Camisea Gas Development Project (Camisea Project) for the MLAs to provide an independent environmental and social assessment of the Camisea Project. Based on its review, URS issued an Environmental and Social Due Diligence assessment report for the Downstream Project (September 2003), which concluded that the Sponsors plans and programs were adequate in scope and when properly implemented, would ensure that the project would conform with the Banks environmental and social objectives. Subsequently, in July 2002, the MLAs also requested URS to perform an independent environmental and social assessment of the Upstream portion of the Camisea Project owing to the overlapping nature of the two portions of the Camisea Project. Under a separate contract, URS also performed an independent Environmental and Social Assessment of the Upstream portions of the Camisea Project on behalf of the Export-Import Bank of the United States (Ex-Im Bank). Since the construction of the Camisea Project was underway before the assessments could be completed, URS also provided full-time environmental and social monitoring of construction of the Camisea Project at the request of the MLAs starting in Septem ber The continual monitoring was mandated to provide the MLAs and other domestic and international stakeholders with reliable and objective information regarding the project's ongoing compliance with environmental and social management plans and procedures, as well as construction best management practices (BMPs). 2.0 PROJECT DESCRIPTION: The Camisea Gas Development Project is a significant and integral part of the energy policy of the Government of Peru and its economic benefits are expected to be nationwide and especially in the Department of Cuzco, where the Camisea gas fields are located. The Camisea project will also provide the cleaner burning natural gas to the electricity sector of Peru and help modernize the utility industry (Plan de Electrificacion Rural Periodo ). In addition, the Project will help reduce the hydrocarbon trade balance deficit, and result in an increase in export revenues for Peru. The Government of Peru in developing the project separated the project into three subprojects - the gas field development in Block 88 as well as the natural gas liquids Fractionation Plant and the Export Terminal ( Upstream Project ), the natural gas and natural gas liquids transportation pipeline ( Downstream Project ) and the natural gas distribution network in Lima and Callao ( Distribution Project ). The Downstream Project consists of a 33-year concession agreement with TGP to build, own, operate and transfer two major pipeline systems: a 697 kilometer (km) natural gas pipeline and a 575 km natural gas liquids (NGL) pipeline. The two pipelines were laid in parallel trenches on a common right-of-way (ROW) extending from a gas processing plant at Las Malvinas, located in the Ucayali Basin 431 km east of Lima, to the NGL processing and shipping facility near the Port of Pisco, 200 km south of Lima. The natural gas pipeline then runs north to the Lima City gate at Lurin from a point east of Pisco (Figure 1). Page 1

2 The Upstream Project consists of project components (seismic exploration, well fields, flow lines, camp sites) in Block 88, processing facilities (cryogenic facilities, and separation plant for natural gas liquids and natural gas compression and reinjection facilities) at Las Malvinas along the Urubamba River, approximately 430 kilometers east of Lima as well as the Natural Gas Liquids Fractionation Plant and Export Terminal near Pisco on the Pacific coast. Block 88 is located in the vicinity of the Camisea River, approximately 20 km east of the Urubamba River. Within Block 88 (Figure 2), the aspects of the Upstream Project included the seismic geophysical exploration surveys conducted in 2002; the drilling and completion of production and injection wells at San Martin 1 and San Martin 3 well pads; and construction of the flow lines that connect the production and reinjection wells to Las Malvinas. A Gas Processing and Cryogenic Plant at Las Malvinas was constructed along the eastern bank of Urubamba River outside of Block 88, where the natural gas liquids and the natural gas are separated before being transported via separate pipelines. The natural gas liquids Fractionation Plant and Export Terminal near Pisco within the Paracas Bay are also included as a part of the Upstream Project (Figure 3), while the construction and operation of the pipeline between the Gas Processing and Cryogenic Plant at Las Malvinas and the natural gas liquids Fractionation Plant near Pisco are part of the Downstream Project. The Upstream Project also included the construction of four pipes, one power cable and submarine instrumentation, from the Fractionation Plant to the Loading Terminal at 15 meters water depth and 3200 meters offshore. Two of the four pipes transport refrigerated propane and butane while one 24-inch pipe transports naptha, and one diesel to the Loading Terminal. It is noted that the Distribution Project is outside the scope of URS review. The Camisea project was constructed in an area of high environmental and social significance. Block 88, where the gas fields are located encompasses extensive areas of terrestrial ecosystems broadly classified as primary tropical rain forest and covers one of the most biodiverse areas on the planet. The tropical rain forests of the region rank as the world s most highly evolved ecosystems and home to indigenous population groups including people living in voluntary isolation. In addition, the site selected for the Fractionation Plant and Export Terminal is within the Buffer Zone and at a distance of 7 kilometers north of the Paracas National Reserve, an area designated as an archaeological resource, coastal wetland, migratory bird and marine sanctuary - the only such reserve in Peru. Likewise, the gas and NGL pipeline route crosses some of the most difficult terrains, beginning at the pump and compressor stations at Las Malvinas in the District of Echarate, on the banks of the Lower Urubamba River (Kilometer post, Kp 0) and the tropical rainforest ecosystem ( Selva Segment ) for the first 182 kilometers. Thus the Selva segment of the pipeline route encompasses approximately 182 Km of pipeline right-ofway (ROW) at elevations typically less than 2,500 meters above sea level (masl) and mostly in the Department of Cusco. From Kp 182 in the Province of La Mar in Ayacucho to approximately Kp 455 (273 kilometers), the pipeline crosses over the Peruvian Andes cordillera ( Sierra Segment ) primarily through the Departments of Ayacucho and Huancavelica. This physiographic province is divided into upper and lower Andes, based on orographic precipitation patterns and associated vegetational cover types. The lower Andes is covered by tropical rainforest while the upper Andes features alternating high plateaus, dissected valleys and isolated summits. The Sierra segment of the pipeline route is at elevations, typically between 2,000 and 5,000 masl. From the western flank of the Andes (at approximately 2,000 masl), the pipeline route traverses desert lying between the Andes and the Pacific Coast ( Coastal Segment ) in the Departments of Ica and Lima. The NGL pipeline runs from Kp 455 to Kp 520 (approximately 65 Km) into the Pisco Fractionation Plant and the Export Terminal. From the divergence point of the natural gas and natural gas liquids pipelines, the gas pipeline route parallels the coast to the north to the City Gate in Lima (Kp 700) through arid and semiarid coastal desert across dry and irrigated farmlands. Page 2

3 3.0 URS SCOPE OF WORK RELATED TO THE CAMISEA PROJECT URS involvement in the Camisea Project consisted of three main parts: 1. Environmental and Social Due Diligence (ESDD) Assessment of the Downstream Transportation Project; 2. ESDD of Upstream Production, Flowlines and Plant Facilities in the rainforest region and the Fractionation Plant and Export Terminal in the coastal region; and 3. Environmental and Social Monitoring of construction of the Camisea Project (including both the Downstream and Upstream Projects) by the project sponsors. 3.1 ESDD of Downstream Project URS Corporation (URS), an international environmental and engineering consulting firm, was contracted by the MLAs in March 2002 to perform an independent Environmental and Social Due- Diligence (ESDD) Assessment of the Camisea natural gas and natural gas liquids transportation pipeline project (Downstream Project). The ESDD was performed as a prerequisite by the MLA s for granting development financing to TGP. Since project construction was already underway and because TGP and Pluspetrol were still developing some of the environmental and social plans and reports as the independent review was on going, the independent environmental and social monitoring of the construction of the Downstream Project was also initiated in September The main objectives of the environmental and social due-diligence assessment were to: Summarize the relevant characteristics of the Project related to environmental, social, and health and safety aspects based on a review of existing information and site reconnaissance. The relevant characteristics of the project included project description; legal and institutional framework; environmental and social conditions; environmental, social and health and safety impacts and risks; environmental and social mitigation and monitoring measures; health and safety procedures; contingency/emergency procedures; and public consultation; and, Evaluate the adequacy of the proposed Project environmental, social and health and safety assessments, plans and procedures and present conclusions and recommendations associated with identified deficiencies or issues, for example, impacts not identified or properly evaluated, impacts not properly mitigated, insufficient monitoring programs, potential environmental risks and liabilities. In accomplishing the objectives of the independent environmental and social due diligence assessment, an d considering the significant environmental and social conditions of the project, URS team of specialists included individuals with specific training and experience in oil and gas field environmental assessment, pipeline construction, rainforest ecosystems, surface runoff and erosion control technologies, health and safety aspects of the pipeline construction and operation, oceanographer with specific expertise in aquatic ecology, regulatory specialists familiar with Peruvian regulatory framework and a social anthropologist with specialization in indigenous communities of Peru. The evaluation and assessment of the potential impacts from the construction and operation of the upstream and downstream portions of the project included, Detailed review and evaluation of project-related technical information furnished by the MLAs and the Project Sponsors and their consultants; Review and assessment of the project contracts, reports prepared by other entities such as the non-governmental organizations (NGOs); An environmental, health and safety reconnaissance of the project site by the URS technical specialists in May 2002; and a follow-up environmental reconnaissance of the pipeline ROW and major base camps that were under construction, in June, 2002 and Page 3

4 July, 2002; followed by specific environmental and social reconnaissance of the Upstream Project during September 2002 and February Meetings with government officials, members of the indigenous communities, community members and attendance in public meetings, open houses and other social outreach programs. Based on the information gathered during the site visits and a review of the environmental and social reports provided by the MLAs and TGP and their consultants, a draft Environmental and Social Due Diligence report was prepared for the Downstream Project in December The draft report also included information gathered by the field monitors who monitored the construction activities starting September Following review and comments by MLAs and review of additional documents and the initial recommendations from the field monitoring (see below), the final ESDD report was published in September ESDD of the Upstream Project Because of the overlapping nature of the upstream and downstream projects and their potential impacts on the environmental and social conditions of the region, URS also performed an independent environmental and social due diligence assessment of the Upstream Project starting July 2002 on behalf of the MLAs. The objectives of the MLAs in the review of the Upstream Project were similar to the objectives described above for the Downstream Project. In accomplishing the objectives of the independent environmental and social due diligence assessment, and considering the significant environmental and social conditions of the project, URS team of specialists included individuals with specific training and experience in oil and gas field environmental assessment, rainforest ecosystems, surface runoff and erosion control technologies, oceanographer with specific expertise in aquatic ecology, regulatory specialists familiar with Peruvian regulatory framework and a social anthropologist with specialization in indigenous communities of Peru. The evaluation and assessment of the potential impacts from the construction and operation of the upstream portions of the Camisea Project included, Detailed review and evaluation of project-related technical information furnished by the Project Sponsors and their consultants; Review and assessment of the project contracts, reports prepared by other entities such as the non-governmental organizations (NGOs); An environmental, health and safety reconnaissance of the project site by the URS technical specialists in the summer of 2002; The final ESDD report for the Upstream Project was issued to the MLAs in June The Export-Import Bank of the United States (Ex-Im Bank) considered an application for partial financing by Upstream Consortium independent of the MLAs review. Therefore, under a separate Consultant Services Agreement, URS performed the following tasks for the Ex-Im Bank. Task 1 - Information Review - URS reviewed the relevant environmental project documents and information. URS evaluated the accuracy and completeness of the information and evaluated whether they adequately reflected the environmental and social elements of the project. Task 2 Identification of Information Gaps - URS identified information and documentation that should have been developed ahead of construction and made recommendations as to additional required documentation. URS also recommended measures (e.g. baseline monitoring at future production well sites such as San Martin 3) that should be undertaken. Task 3 Regulatory Compliance - URS reviewed information for compliance with applicable environmental and health and safety requirements adopted in Peru. Particular attention was given to compliance of the project and its associated components to Ex-Im Bank s environmental objectives listed in Annex A of Ex-Im Bank s Environmental Page 4

5 Procedures and Guidelines (December 2001) and the applicable guidelines listed in associated tables (e.g. Tables 5, 6 and 7), World Bank guidelines and policies, and oil and gas industry guidelines. Task 4 Accuracy and Completeness of Identified Impacts and Mitigation Measures: URS commented on the accuracy and completeness of the identified impacts, and on the adequacy of mitigation and other (e.g. monitoring) measures implemented by Pluspetrol and its contractors. Task 5 Adequacy of Recommended Measures: URS commented and advised Ex-Im Bank on the adequacy of Sponsor s responses to direct, indirect and cumulative impacts and the mitigation and monitoring measures. The mitigation measures were also reviewed in light of future concessions approved by the Government of Peru for forestry and oil and gas extraction. URS verified whether the proposed mitigation and monitoring measures are being implemented by Pluspetrol and their contractors, in order to avoid and/or to minimize identified and projected impacts. URS opined on the effectiveness of such measures and recommended ways to improve. Task 6 Opinions on Irreversible Impacts: To the extent that the construction was approaching 40% in Block 88 as of December 2002, URS was requested to opine on the irreversible impacts that had already occurred and their consequences. URS also opined on the effectiveness and methods and measures used by Pluspetrol to mitigate such environmental and social damage, including compensation measures and proposals for mitigation. Task 7 Site Visit - Five URS specialists participated in a site reconnaissance, consisting of visual observations of relevant project areas directly and indirectly affected by the project. The technical focus of the personnel included biodiversity and rainforest ecology; Social impacts and compensation measures; marine/coastal resources; erosion control and impacts to waterways and oil and gas field development. URS also participated in meetings with the communities and local stakeholders in order to report on the effectiveness of the methods undertaken by Pluspetrol to interface with communities, and community reactions to the project. URS also opined on methods by which community concerns were being addressed (e.g. compensation plan). Task 8 Commentary on Monitoring Systems: URS reviewed and commented on mechanisms that were in place to secure compliance with the Sponsors and Government s procedures. URS evaluated the adequacy of resources (human and financial) dedicated to the management and monitoring of the project s impacts and mitigation and made recommendations as to the necessary improvements to the shortterm and long-term programs and their implementation. Task 9 Permit Status: URS provided a brief overview of the permit status (e.g. discharge permits), including the anticipated time of approval. Page 5

6 The environmental and social assessment of the Upstream Project was completed for the Ex-Im Bank in May Environmental and Social Monitoring During Construction As previously stated, URS also performed an Independent Environmental and Social Monitoring (IESM) during the construction-phase of the project starting September 2002; URS performed the monitoring of the Camisea project and was primarily focused on the Downstream Project; however, both the Upstream and Distribution projects were monitored by URS field personnel. The objectives of the IESM were to provide the MLAs with reliable and objective information regarding the project's compliance with environmental and social management plans and procedures, as well as construction best management practices (BMPs). The IESM effort consisted of two full-time monitor personnel with specialization in environmental and social aspects of pipeline construction. They monitored the project on a daily basis, by performing the following activities: Site visits throughout the construction zone, which included (a) discussions with the environmental and social representatives of the Company or other applicable personnel (e.g., field supervisors of EPC contractor and subcontractors); (b) review of relevant on-site information, files, monitoring data, etc.; (c) visit to particular project areas where relevant environmental, social, and health and safety activities existed; and (d) discussions, as feasible, with local residents near the project site and applicable governmental authorities. URS reported to the project sponsors and the IDB on a daily and weekly basis through verbal communications and monitoring reports. On a monthly basis, URS prepared monthly monitoring summary reports that were posted on the project website ( These summary reports were prepared to document the effectiveness of the project s environmental management plans and procedures (Plan de Manejo Ambiental [PMA]) and the recommendations for improvement wherever applicable. Deficiencies identified in the field were reported directly to TGP s Field Environmental Supervisors prior to publication on the project website. In addition to reporting observed deficiencies, the monthly summary reports also highlighted observations of proper implementation of PMA specifications. Pluspetrol and TGP had several environmental and social programs that were execut ed during the construction -phase. URS monitored compliance with the following programs: Communication Programs Environmental Studies Program Community Environmental Monitoring Program Training Programs including compliance with the Code of Conduct Policies Local Employment Program Program for the establishment of Agreements and Compensations Compensation and Indemnity Program Special Studies Program Supervision and Monitoring Program Archeology Program Anthropology Contingency Plan for Non-Contacted Peoples Environmental Management Plans Health and Safety Plans URS also reviewed the monitoring programs implemented by Pluspetrol and TGP and the monthly reports that are published and posted on the Camisea website ( Page 6

7 For a more complete documentation on URS monitoring, refer to the monthly summary reports, also posted on the Camisea website. 4.0 ASSESSMENT OF COMPLIANCE WITH THE PMA DOWNSTREAM PROJECT URS evaluated observed deficiencies in a qualitative and quantitative manner with respect to the number of the deficiencies in a given aspect of the PMA implementation (e.g. waste management) and provided a quantitative evaluation of TGP s performance on the construction of the Downstream Project. Periodic confirmation site visits were also conducted by senior URS pipeline construction specialists and other personnel on approximately a quarterly basis. Their summary trip reports with recommendations were also provided to the project sponsors and MLAs. In general, considerable effort and resources were expended to construct the project in an environmental and socially acceptable manner. However, IESM monitors did observe a pattern of inconsistent implementation of the PMA, particularly during the early phases (during the first rainy season of construction in ) of the project. Whereas instances of inconsistent implementation of approved environmental plans and programs can be observed on any pipeline construction project (regardless of location), the monitoring did reveal a pattern of recurrent compliance problems in the following general areas: 1. Effective Health and Safety Management. The construction safety was a concern during the first rainy season when the construction occurred in the rainforest region of the pipeline spread. The safety incidents (and deaths) were more than typical for such complex projects in developed countries. However, as constructed proceed into the highlands and the coastal plains, the construction safety improved given the ease of the terrain and better implementation of the program. 2. Timely installation of temporary Best Management Practices to provide temporary protection to land and related water resources by preventing land sliding, excessive erosion and sedimentation of surface waters and bofedale wetlands. It was perceived that the construction proceeded at a faster rate than the erosion control and reclamation activities; this resulted in severe erosion in some limited areas due to lack of timely implementation of such erosion control measures and maintaining and monitoring of such mitigation measures. 3. Timely implementation of spill prevention, secondary containment, and spill remediation measures at locations where fuels, lubricants, and other potential contaminants (including contaminated soils) were stored. 4. Effective waste management and sanitary practices at camps and along the ROW. Although actions were continuously taken to mitigate previously identified deficiencies, new deficiencies were observed, suggesting inefficient coordination of proper implementation into the construction sequence by the construction contractor. As construction progressed, minor improvement was noted, however, the learning curve did appear longer than one would have expected. As described in URS monthly summary reports, the probable causes for repeated noncompliance included: 1. General lack of experience in construction of major pipeline projects in Peru, particularly with respect to assimilation of environmental, social, and safet y mitigation measures into the construction execution. 2. Inadequate regulatory jurisdiction and legal enforcement by the Government of Peru. Page 7

8 3. The construction contractors failure to implement construction specifications in a coordinated effort that focused due attention to all aspects of construction. The probable cause was likely underestimation of the required level of effort and corresponding budget considerations. 4. Inadequate leadership and training to crews responsible for the proper implementation. 5. Insufficient dedicated staff to implement measures. 6. Insufficient surveillance and enforcement by TGP. Fortunately, nearly all inconsistencies observed were minor in nature and few, and if any, have resulted in long -term adverse impact to land, water, and community resources. Based on field review by the IESM monitors and senior URS staff, most issues identified were satisfactorily resolved during the final construction and restoration phases. Based on the weekly monitoring reports filed during October 2004, most of the outstanding issues pertain to minor cleanup activities at former camps and temporary worksites. None of the outstanding issues appear to be of major significance. In September 2003, TGP initiated a Permanent Erosion Control (PEC) program to augment the initial right -of-way restoration completed by the mainline contractor. Additional budget provisions were made by TGP to fund this work. Owing to the high rainfall and steep terrain characteristic of the rain forest/cloud forest portions of the Selva sector, and the steep terrain and difficulty of vegetation establishment characteristic of the Andean Sierra sector, the PEC program was a significant positive measure that TGP instituted to help ensure effective stabilization of the ROW. The PEC program was designed and directed in the field by an experienced geotechnical specialist from Geotec of Colombia. Laborers, operators and heavy equipment were made available to implement the final stabilization work based on the engineer s field design. These measures installed included construction of slope breakers, runoff collection channels, terraces, buttresses, revetments, and gabions, in addition to ROW seeding and special plantings. This work was performed universally over the entire ROW, and no areas needing supplemental stabilization work was omitted. In nearly every instance, the IESM monitors determined that the execution of the PEC work was well designed and of very good quality. 5.0 GOVERNMENT OF PERU LETTER OF COMMITTMENT Regarding the status of compliance with the milestones set out in the Government of Peru Letter of Commitment related to environmental and social aspects in the Camisea Project, to the reasonable knowledge of URS, this status is as reported in the follow IDB reports/documents: (a) Report Summarizing Performance of Environmental and Social Commitments in the Camisea Project (June 2004); (b) draft Report Summarizing Performance of Environmental and Social Commitments in the Camisea Project (December 2004); and (c) Report on the Evaluation of the Program for Institutional Strengthening and Environmental Management Support for the Camisea Gas Project (October 2004). CONCLUSIONS 1. Overall, URS concludes that the construction of the Camisea Downstream project was completed in an envi ronmentally acceptable manner and in substantial compliance with the Environmental Management Plan (PMA) and standard environmental mitigation practices for pipeline construction. Whereas deficiencies in PMA implementation were observed during construction, the outstanding issues do not cumulatively result in significant adverse impact, 2. Throughout construction, IESM monitoring did identify deficiencies in consistent implementation of the PMA. However, nearly all issues were resolved shortly after identification and closed out by final restoration. Final punch lists were prepared and submitted to TGP. Page 8

9 3. TGP implemented a Permanent Erosion Control (PEC) program to augment the final restoration work completed by the mainline contractor. The PEC program was judged by URS to be an unequivocal success in ensuring post-construction due diligence for ROW stabilization and impact mitigation. 4. It was URS observation that the communities viewed the project as one project and did not differentiate between the upstream and downstream projects, and there continued to be some confusion caused by differences in programs (e.g. purchase of local products). URS recommends that the projects of this nature should have a single project plan that is consistent and available in one document for all stakeholders to review and follow through in future. 5. Since several of the environmental and social impacts are cumulative in nature, TGP should continue to implement and provide strict oversight during the operational phase of the project. URS observations are limited to the construction phase only and long-term impacts and the effectiveness of the mitigation measures need to be monitored. 5.0 ASSESSMENT OF COMPLIANCE WITH THE PMA UPSTREAM In general, PlusPetrol did a commendable job in completing the upstream project in an environmentally and socially acceptable manner. PlusPetrol s health and safety management program and the social programs were similarly well executed. The 3-D seismic survey within Block 88 was completed in October 2002 and the survey area was designed to limit the area of encroachment on the Nahua-Kugapakori Reserve. In order to verify the effectiveness of the reclamation of the seismic pads and seismic lines, URS visited a few of the selected sites in February 2003 and the conclusions are that the surveys were conducted with little or no impact to the environment. There were a few reported encounters non -contacted peoples, but the contractor personnel appear to have taken measures to limit the impacts. The San Martin-1 and San Martin 3 well pads were constructed on pre-existing cleared areas and additional areas were cleared for construction. Since the San Martin 1 was constructed at the beginning of the project, it appears some of the erosion control measures were not fully addressed at the beginning and limited areas of erosion were encountered. However, Pluspetrol and its contractors subsequently implemented appropriate mitigation measures to address the impacts and prevent any further. The construction of San Martin 3 well pad included lessons learned from prior experience. The flowline ROW between San Martin 1 and Las Malvinas was partially on pre-existing access road. The initial stages of construction resulted in severe erosion in limited areas, but as construction proceeded, the contractor personnel minimized the erosion impacts. The gas plant at Las Malvinas was constructed according to environmental management plans and the only issues of concern were with some of the worker camps and the code of conduct of some workers and their encroachment into Tupac Amaru. Once these violations were pointed out, Pluspetrol took appropriate measures to enforce the code of conduct practices. Likewise there were reported casualties associated with river transport along Urubamba and helicopter transport of equipment to San Martin-1. Pluspetrol tightened up on their monitoring program and the training program for personnel so that significant safety incidents were avoided. The Fractionation Plant and the Export Terminal were likewise constructed with good implementation of the environmental control plans and communication programs. Pluspetrol and their contractors followed through on recommendations and the Paracas site is a better condition now that when URS personnel made their first site visits in Several areas within Lot 88 where construction activities occurred (San Martin 1 and San Martin 3 well pads, flow line ROW, seismic stations) are not accessible to foot traffic and this would result in minimal long -term impacts. Since several of the environmental and social impacts are cumulative in nature, Pluspetrol should continue to implement and provide strict oversight during Page 9

10 the operational phase of the project. URS observations are limited to the construction phase only and long-term impacts and the effectiveness of the mitigation measures need to be monitored during the operations. 6.0 LIMITATIONS: The opinions and judgments presented in this report are based on review of technical information presented in project documents and field visits by URS personnel. Because the observations were made whenever the personnel revisited a given site, there may have been conditions that were not visible or information not available. This report is prepared solely for the use of Inter- American Development Bank and Corporacion Andina de Fomento. Any further reliance by third parties, without the prior written consent of URS, shall be at such party s sole risk. 7.0 REFERENCES 1. Final IESM Environmental Punch Lists: Selva, Sierra, and Costa, October, Trip Report from Mark Riforgiat to Elizabeth Brito/Hilary Hoagland-Grey dated November 3, 2004 re: Final Inspection of Erosion Control and Stabilization 3. Trip Report from Mark Riforgiat to Elizabeth Brito/Hilary Hoagland-Grey dated June 20, 2004 re: Status of Erosion Control and Stabilization Camisea Upstream and Downstream Projects June 14 June 20, URS Memorandum dated March 23, 2004 from URS to Elizabeth Brito re: Erosion Control Status Report; Camisea Dow nstream Project, Peru. 5. Trip Report from Mark Riforgiat to Hilary Hoagland-Grey dated December 1, 2003 re: Erosion Control and Stabilization Inspection Camisea Upstream and Downstream Projects November 11 November 18, Environmental and Social Due Diligence Report Camisea Upstream Project (URS, June 2003). 7. Environmental and Social Due Diligence Report Camisea Downstream Project (URS, September 2003) 8. Environmental and Social Asssessment Camisea Upstream Project (URS, May 2003) (prepared on behalf of the Export-Import Bank of the United States) 9. Environmental and Social Monitoring Reports September 2002 through October 2004 ( Page 10