March 5, 2006

Camisea gas pipe leaks for fifth time in Peru

LIMA, Peru (Reuters) - Peru's Camisea gas pipeline has
leaked for the fifth time in 18 months, causing a fire and
injuring two people, its operator said on Sunday, following
warnings of ruptures because of poor pipe construction.

Pipeline operator Transportadora de Gas del Peru (TgP), a
consortium led by Argentina's Techint, said the 430-mile
(720-km) pipe on Saturday leaked 750 cubic meters of natural
gas in Peru's southern jungle region, home to one of the
world's most biodiverse rain forests.

"The estimated volume of liquid lost is 750 cubic meters. A
fire also broke out at the leakage point, which is burning up
the spilled liquid," TgP said in a statement.

The company said one person suffered burns from the leak
and another inhaled gas.

Peru's Prime Minister Pedro Pablo Kuczynski said the leak
may have been caused by sabotage on the pipeline. TgP was not
immediately available for comment.

The pipeline, which was built with Inter-American
Development Bank funding, has leaked five times since it began
pumping natural gas to Lima in mid-2004, causing growing anger
among communities living along the pipeline route.

San Diego-based environmental consultancy E-Tech
International last week handed a report to the IADB to warn the
pipeline was likely to leak at six points because of rusty,
badly welded pipes. TgP has rejected the report's findings.

Argentinian oil group Pluspetrol, Hunt Oil of the United
States, South Korea's SK Corp., Algeria's Sonatrach, Peruvian
builder Grana y Montero and French utility Suez also are
partners in TgP.

According to the E-Tech report, at least half of the
Camisea tubing used in the pipeline construction was left over
from other projects and was severely corroded.

The pipeline previously leaked in November, spilling 6,000
barrels of fuel into the jungle, according to the government,
which has warned TgP it could cancel its operating contract if
future leaks occur.

Peru hopes to export Camisea gas to Mexico from 2010.