Cablegate: Camisea Pipeline Update: Audits

VZCZCXYZ0003
RR RUEHWEB

DE RUEHPE #4480 3281956
ZNR UUUUU ZZH
R 241956Z NOV 06
FM AMEMBASSY LIMA
TO RUEHC/SECSTATE WASHDC 3084
RUEHQT/AMEMBASSY QUITO 0840
INFO RUEHBO/AMEMBASSY BOGOTA 4123
RUEHBR/AMEMBASSY BRASILIA 7099
RUEHBU/AMEMBASSY BUENOS AIRES 2682
RUEHCV/AMEMBASSY CARACAS 9960
RUEHLP/AMEMBASSY LA PAZ NOV SANTIAGO 0961
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHDC
RUMIAAA/USSOUTHCOM MIAMI FL
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RHEBAAA/DEPT OF ENERGY WASHDC

UNCLAS LIMA 004480

SIPDIS

SIPDIS

DEPT FOR WHA/AND, WHA/EPSC, OES
TREASURY FOR U/S TAYLOR, K. KOZLOFF, J. LEVINE
STATE PASS TO EXIM
DEPT OF ENERGY FOR S. LADISLAW
ENERGY INFORMATION ADMINISTRATION FOR CHARLES ESSER

E.O. 12958: N/A
TAGS: ENRG ECON ETRD EAID SENV PE
SUBJECT: CAMISEA PIPELINE UPDATE: AUDITS

REF: LIMA 0952

1. SUMMARY: Three audits of Camisea pipeline construction and
performance are in progress. The GOP contracted its audit to German
firm Germanischer Lloyd, and a report is expected early next year.
Camisea Consortium TGP delivered its internal audit report to the
GOP, and a condensed version for public release is expected in the
coming weeks. The Interamerican Development Bank (IDB) audit of
environmental/social impacts should be completed by March 2007.
Separate reports on pipeline sections for two of the liquids
pipeline ruptures were completed, showing landslides as the cause of
the ruptures. END SUMMARY.

2. After the fifth Camisea liquids pipeline incident in March
(Reftel), the GOP's Energy Ministry (MEM) and Camisea pipeline
consortium Transportadora de Gas Peruana (TGP) commissioned
technical audits of the pipeline that are still in progress. The
Interamerican Development Bank (IDB) commissioned an
environmental/social audit that will not deal with engineering
issues. The two technical audits are examining pipeline routing,
construction issues and operations. While the audits are examining
the gas pipeline, the focus is on the jungle portion of the parallel
gas liquids pipeline that has suffered five integrity incidents
since gas and liquids began flowing in August 2004.

3. The MEM evaluated eleven bidders for the GOP audit, and in
September awarded a $1.9 million contract to the Mexican subsidiary
of the German technical monitoring firm Germanischer Lloyd; the
contract was finalized October 17. Germanischer Lloyd Peru
officials told Econoff that the firm was under strict instructions
not to discuss the audit with third parties. Gustavo Navarro, MEM
Hydrocarbons director and the GOP overseer of the audit contract,
told Econoff that the audit was progressing but no report was
expected until February. He noted that the MEM, TGP and Banco de
Credito had finalized an agreement to fund the audit. TGP Chief of
Corporate Relations Rafael Guarderas confirmed that Germanischer's
work was proceeding and that TGP was organizing field visits for the
firm in December.

4. Guarderas also reported on TGP's internal audit. TGP has spent
$40 million over the last eight months and employed 1500 workers to
analyze and perform corrective maintenance to the entire pipeline
system. TGP used robotic "pigs" to travel the inside of each
section. It found anomalies in 30 pipe sections out of about 48,000
sections in total; most of the anomalies were gashes and none
indicated significant risk of rupture. TGP has issued its report to
the MEM and is preparing a condensed version of the report which
will be released to the public.

5. Two pipeline sections involved in rupture incidents were removed
from the system to undergo physical analysis. One section, from the
November 2005 incident, fell into a river and TGP workers could not
extricate it until this Spring. The other section, from the March
2006 rupture, was sent to Texas engineering firm MCI for analysis.
Reports on both sections revealed that environmental pressures
(landslides) and not structural or welding defects caused the
sections to break.

6. The IDB is funding its own environmental and social audit (AASI)
of the Camisea project as part of its 2003 loan commitment; this
audit will not deal with engineering aspects of the pipeline. AASI
auditors are in the field now, and the final report is expected in
March 2007.

COMMENT
-------
7. (U) The results of the various pipeline audits will be important
to assess lessons learned from the past, but looking to the future
is even more important. TGP has been in a constant process of
refining the pipeline routing and reinforcement. The rainy season
that has just begun will be the test of TGP's improvements, as all
of the incidents have occurred during the November to April rains
when waterlogged earth exerts pressure on the pipes.
STRUBLE

© Scoop Media