Peru Pipeline Operator Betting on Improved Security in Rebel Territory

By Ryan Dube

LIMA, Peru--The operator of a gas pipeline that is key for Peru's energy security is betting on improved security in a region rife with leftist rebels in order to restart in the coming months an expansion project and maintenance works on the infrastructure.

The general manager of consortium Transportadora de Gas del Peru, Ricardo Ferreiro, said during a news conference that the company hopes to restart the works at the end of the rainy season, which would be around April.

Mr. Ferreiro said he sees a "serious commitment" from the government to improve security in the lawless area. "We are working together with the government to implement all of the security conditions so that as soon as the rainy season ends we can gradually restart the activities," he said.

Last year, a splinter group of the Shining Path rebels launched several high-profile attacks against state security personnel and private firms operating close to the mountainous, jungle zone known as the valleys of the Apurimac, Ene and Mantaro rivers, or VRAEM.

The rebels kidnapped 36 natural gas workers and later killed about 10 police and military officers that were sent into the area on a rescue mission. The botched mission led to the resignation of Peru's interior and defense ministers.

The Shining Path also attacked a jungle airstrip in the region, burning three helicopters used by Transportadora de Gas del Peru.

The attacks prompted the consortium, known as TgP, to suspend maintenance on the pipeline and halt work on a compressor plant that would increase the pipeline's transport capacity. It said the lack of security was putting at risk Peru's energy security.

Mr. Ferreiro said if security improves, the compressor plant could be operational in the first quarter of 2015.

About 50% of the feedstock for the nation's electricity generation depends on the pipeline, which transports gas from the Camisea fields in southeastern Peru to the country's Pacific coast.

Officials from the administration of President Ollanta Humala, a former military officer, have since promised to beef up security in the region, which has lacked a strong state presence. The government has said it will build military bases and increase the number of state security personnel stationed in the VRAEM.

It also plans to tackle the Shining Path's main source of revenue by eradicating coca leaves in the area for the first time. The VRAEM is Peru's top producer of coca, which is the base for making cocaine. Analysts say the Shining Path has profited from Peru's expanding cocaine trade. Peru is one of the world's top producers of cocaine, along with Colombia.

TgP is made up of Tecgas NV of Argentina, Hunt Oil of the United States, Sonatrach of Algeria, Argentina's Pluspetrol, South Korea's SK Corporation, Franco-Belgian GDF Suez-Tractebel SA and Peru's Grana y Montero SAA (GRAMONC1.VL).

Write to Ryan Dube at [e-mail]

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