1 1

Promoting transparency and

trust by strengthening

community E&S monitoring

PERU LNG’s Pipeline Participatory

Monitoring Program

2

PERU LNG

• Peruvian company formed by Hunt Oil

Company (50%), SK (20%), Repsol-YPF

(20%), Marubeni (10%)

• The Melchorita LNG Plant is located on

the coast 170 km south of Lima. It

includes a process train, two LNG

storage tanks, and a marine terminal.

• A 34” 408 km pipeline transports the

natural gas from the highlands of Peru

(Ayacucho) to the LNG Plant.

• Total investment: US$ 3.8 billion, the

largest private investment to date in

Peru. The project has financing from

IFC, IDB, US-Exim, K-Exim and SACE.

ECUADOR COLOMBIA

BRAZIL

B

O

L

I

V

I

A

CHILE

Lima Lima

PERU

PACIFIC

OCEAN

LPG Plant LEGEND

New Gas Pipeline to LNG Plant

LNG

EXPORTS

Cryogenic Plant

Lake

Titicaca Pisco

Compression Station #2

& NGL Pump Station #3 LNG Plant

Pampa Melchorita

Existing Gas Pipeline to Lima

Existing Condensate Pipeline to LPG Plant

Camisea

Gas Fields

ECUADOR COLOMBIA

BRASIL

B

O

L

I

V

I

A

CHILE

Lima Lima

PERU

Pacifico

Océano

Planta de GLP

Ducto nuevo para la planta de LNG

EXPORTS

Lago Titicaca

Pisco

Planta de LNG

Pampa Melchorita

Ducto existente de gas a Lima

Ducto existente de líquidos para la planta de GLP

Camisea

Campos de

Gas

LNG

Malvinas

Planta

Criogénica

3

• A 408 km gas pipeline from the

department of Ayacucho in the

Andes to the Pacific coast.

• Pipeline traverses 22 districts: 9 in

Ayacucho; 4 in Huancavelica; 8 in

Ica; and 1 in Lima.

• Within area of direct influence: 35

rural communities, 30 annexes, 26

localities, and 12 associations

The PERU LNG Pipeline

4

5

• A project of this magnitude raises concerns and creates expectations.

• Accurate and timely information is crucial to clear any doubts.

• To respond to concerns and proactively interact with Stakeholders, PERU LNG designed a set of Key Social Management Plans in line with line with IFIs standards:

1. Stakeholder Engagement Plan

2. Grievance Management Procedure

3. Rural Andean Community Management Strategy

4. Pipeline Compensation Management Program

5. Local Hiring & local Purchasing Procedure

6. Conflict Resolution Procedure

The need of extensive interaction and consultation

• These are implemented by PLNG’s Community Relations team through visits, workshops, meetings and other activities.

6

EXTENSIVE

INTERACTION &

CONSULTATION

WITH

STAKEHOLDERS

LOCAL

HIRING AND

PURCHASE

PLAN

GRIEVANCE

MANAGEMENT

PROCEDURE

STAKEHOLDER

ENGAGEMENT

PLAN

PIPELINE

COMPENSATION

MANAGEMENT

PLAN

E&S

INVESTMENT

PROGRAM

CONFLICT

RESOLUTION

PROCEDURE

ANDEAN

COMMUNITY

MANAGEMENT

STRATEGY

Consistent and coordinated approach

to stakeholders

Timely information about PLNG

activities and potential impacts.

Opportunities to stakeholders to

voice their opinion and concerns.

Opportunities for discussion

concerning measures proposed.

Active involvement of stakeholders in the

oversight of Company Performance

Integrate Community participation

into PLNG’s assurance process.

Build trust among monitors and

communities they represent.

Guarantee that Community concerns

are effectively addressed.

+

Building a constructive relation with stakeholders

+

7

• PERU LNG began implementing PMSAP in 2008.

• Involves the participation of local community monitors.

• Local monitors supervise the fulfillment of commitments to care for the land, water bodies, soil, plants and animals in the area.

• This program is being implemented in 35 communities along the pipeline Right-of-Way.

Participatory E&S Monitoring Program (PMSAP)

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PMSAP Specific Objectives

• Integrate community participation into Company assurance processes.

• Build trust among monitors and communities.

• Ensure community concerns are addressed.

• Use Community feedback to improve performance.

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• Design and implementation by a respected independent organization

(Local NGO: ProNaturaleza www.pronaturaleza.org)

• Carried out on a voluntary basis with:

–Communities

–Local authorities

–Civil society

–Government

Development of PMSAP

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Implementation of PMSAP

Program implemented in the following phases:

Program

Design Program

Validation

Selection of

Monitors

Training of

Monitors Field

Monitoring

Present

Results to

Community

1 2 3 4 5 6

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1. Program Design Phase

• Program divided into 3 geographic spreads.

• Specific social and environmental monitoring protocols developed.

• Processing of Monitoring Results:

–User-friendly database

–Action tracking

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2. Program Validation

• Informative meetings held with local communities

– Review of proposed design of program

– Implementation of specific objectives

• Regular meetings to ensure clear understanding of program and respond to program expectations

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3. Monitor Selection

• Monitors selected by communities.

• Number of monitors based on amount of community land affected by the Project.

• Monitor selection criteria:

–Fluent in Spanish & Quechua

–Minimum high school education

–Respected by the community

–Not a local authority

• Women and young people encouraged to seek nomination.

Monitors gender distribution:

38% Women 62% Men

Monitors average age:

32

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4. Monitor Training Phase

• Review program objectives, monitor roles, and necessary commitment.

• Continued training provided:

–Construction/Ops processes

–Use of monitoring protocols and equipment

–Social and environmental commitments

–Potential impacts of specific activities

–Measurements and record keeping

• 84 monitors passed training and selected.

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5. Field Monitoring

• Pilot exercise prior to full mobilization:

–Validate protocols and test field equipment

–Evaluate interview protocols and visit work fronts

–Assess interaction between monitors, Company, and contractors.

• Monitors in field 10 days every month with Program Implementing Partner

16

17

18

19

20

21

22

5. Field Monitoring: Results processing

180

145

39

2 0

Findings 2011

POSITIVE

OBSERVATION

ALERT

RISK

EMERGENCY

Positive Observation Alert Risk Emergency

128

82

28

2 0

38

30

50 03

19

0 0 05 6 5

0 00 0 0 0 06 5

0 0 0

Findings 2011 by Area

GEOTECHNICAL ENVIRONMENTAL OPERATIONS CC. RR. SOCIAL INVESTMENT THIRD PARTY

67%

7%

17%

4%

0%

5%

Findings 2011 - San Miguel / Kp0+000 - Kp51+633

GEOTECHNICAL

ENVIRONMENTAL

OPERATIONS

CC. RR.

SOCIAL INVESTMENT

THIRD PARTY

66%

23%

0%10%

0% 1%

Findings 2011 - Ayacucho / Kp51+633 - Kp210+003

GEOTECHNICAL

ENVIRONMENTAL

OPERATIONS

CC. RR.

SOCIAL INVESTMENT

THIRD PARTY

45%

29%

22%

2% 0%

2%

Findings 2011 - Ica / Kp210+003 - Kp404+003

GEOTECHNICAL

ENVIRONMENTAL

OPERATIONS

CC. RR.

SOCIAL INVESTMENT

THIRD PARTY

95

2431

1926

55

21

38

12

23

0

22

75

14 147

11

33

611

1 3 05

20

1017

12 1522

15

27

11

20

0

17

Evolución de hallazgos - 2011

Total 2011 Positivas Negativas

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6. Presentation of Results to the Community

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Conclusions

• Monitors are providing the Project timely and valuable information, guaranteeing community concerns are addressed.

• Independent Operator ensured effective community participation.

• Community receives accurate information on social and environmental performance; inaccurate perceptions are addressed.

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• Monitors feel confident, better informed, communicate more efficiently and are gaining respect of community.

• Community involvement has promoted transparency.

• Positive impacts viewed as outweighing negative impacts, preventing social conflict.

Conclusions

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• Continue with monitoring through operations, adapting monitoring protocols to this new phase.

• Improve the Data Base and Record Keeping system.

• Develop a webpage to disclose monitoring results to the general public and validate it with Communities.

Next Steps…

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Thank you.