The U.S. Export-Import Bank's board of directors narrowly has turned down an application for a $214.6-million loan guarantee for a $1.5-billion natural gas project in Peru. The Ex-Im directors' 2-1 vote against the application came in a closed portion of a board meeting on Aug. 28. "A majority of the board concluded that the project did not meet all of the bank's environmental guidelines," says Bo Ollison, an Ex-Im spokesman. Ollison wouldn't specify in which environmental areas directors felt the project fell short, nor would he say which directors voted in favor and against the request.

Environmental groups oppose the project, contending it would harm the Amazon forest, a reserve for indigenous people, and a reserve for marine species.

Ollison said the application was from PlusPetrol of Peru and would have involved nearly 60 U.S. exporters and suppliers.

According to a June Inter-American Development Bank report, the project has three components: an $811-million "upstream" portion, which includes gas exploration in the Peruvian Amazon region, a processing plant and a liquid natural gas terminal; a $670-million "downstream" element, composed of a 714-km natural gas pipeline and a 540-km liquid natural gas pipeline; and a $50-million portion for gas distribution.

Environmental groups hailed the bank's action. Aaron Goldzimer, a social scientist for environment and finance with Environmental Defense, says, "This was an important test, and the U.S. Export-Import Bank made a difficult, historic and courageous decision."

Atossa Soltani, executive director of Amazon Watch, says the project sponsors must make two changes--drop plans to drill for gas within the indigenous peoples reserve and relocate the fractionation plant planned for the marine reserve.

The Inter-American Development Bank is considering assistance for the pipeline part of the project--a a $75 million loan and an authorization for a group of commercial lenders to provide a separate $60-million loan.

But the U.S. has requested and received two delays of the IDB action on Camisea. The more recent came on Aug. 6, when the U.S. requested a one-month delay. That expires Sept. 10, says IDB spokesman Daniel Drosdoff.

Drosdoff says, "The IDB is aware of the decision of the U.S. Export-Import Bank regarding potential financing of the upstream component of the Camisea project. The IDB will evaluate the financial and environmental implications of this decision regarding the IDB consideration of financing of a portion of the downstream [pipeline] component of the project."

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