Tag Archives: peru

Latin American currency: Colombia goes bananas

A good way to monitor Latin American currencies is against the Canadian dollar, rather than the US dollar. The USD, as world reserve currency, is mostly a measure of risk tolerance around the world. People fearing instability (still and despite it all) buy greenbacks. But the CAD, as the currency of a stable, developed, but resource-dependent country, is a nice comparison point for the Latin American currencies, as it cuts out a lot of the USD’s noise.

Against the CAD, the Colombian peso long tracked other currencies in the region, particularly the Peruvian nuevo sol and the Chilean peso. Latin American currencies 2010-2014

This first chart shows currencies against the CAD from 1 Jan 2010 to 1 Oct 2014. The Colombian peso (COP) is the red dotted line, green is Peru, navy blue is the Mexican peso, and fucsia is Chile. Up top, you see the Brazilian real and the Argentine peso doing their wacky and devaluatory deeds in red (solid line) and purple.

Here’s what the same currencies have looked like over the past calendar year:

Latin American currencies 1-year chart to 27 July 2015

This time, Argentina is down there with Peru and Chile, actually appreciating against the Canadian dollar. Mexico is drifting weaker, and Colombia is suddenly tracking Brazil in a big, painful devaluation. The are both big oil producers whose state-controlled companies were once stock market darlings. They are both economies that were overhyped circa 2011, and are now probably in an excessive backlash.

The upshot:

Latin American currencies 5-year chart to 27 July 2015Here’s the 5-year chart. Colombia has detached from its usual peers and is devaluing mightily.

The upshot for me, as a consumer of Colombian Harina P.A.N. precooked corn flour in Canada, is that a kilogram of this white powder has dropped from CAD 4 to CAD 3.3 over the past year.

Given what we already saw in 2014, I suspect Colombia will get a competitive advantage in the production of other white powders. Next year’s coca production reports will likely show Colombian output surging.


China plans huge Brazil-Peru rail link

Interoceanic Highway

The new road climbing out of the Amazon into the Andes

Story here.

Chinese premier Li Keqiang is to push controversial plans for a railway through the Amazon rainforest during a visit to South America next week, despite concerns about the possible impact on the environment and on indigenous tribes.

Currently just a line on a map, the proposed 5,300km route in Brazil and Peru would reduce the transport costs for oil, iron ore, soya beans and other commodities, but cut through some of the world’s most biodiverse forest.

The six-year plan is the latest in a series of ambitious Chinese infrastructure projects in Latin America, which also include a canal through Nicaragua and a railway across Colombia. The trans-Amazonian railway has high-level backing. Last year, President Xi Jinping signed a memorandum on the project with his counterparts in Brazil and Peru. Next week, during his four-nation tour of the region starting on Sunday, Li will, according to state-run Chinese media, suggest a feasibility study.


The criticisms are similar to those that met the Interoceanic Highway project along the same general route a decade ago. When I traveled that road in 2011, when it was mostly paved but still missing a couple final links, I found that the most of the predictions of doom had failed to come true, while there were some clear benefits from the road construction. However, the bad news may have been bubbling away, and I haven’t been back to see if things stayed so positive once the road was fully open.

Time to go back!

Aguirre, the Wrath of Petrobras

aguirre_1You can watch the film or you can read the legal brief, in which a modern-day Aguirre sues the king for sending him down a deathtrap Peruvian river. From US District Court for the Southern District of Texas comes the epic drama, “4:14-cv-02155,” starring one J Wilkerson and Petrobras America.

4.1 In February of 2013, Plaintiff was working as a mechanic at Defendant’s facility in Peru, where helicopters delivered supplies and materials in support of Defendant’s oil and gas exploration activities.

4.2 On or about February 13, 2013, when it came time for his work to end, and for Plaintiff to return to the United States, he was unable to depart via aircraft as planned, due to severe rainstorms. Consequently, Defendant provided a small aluminum boat and pilot to transport Plaintiff. The vessel was navigated through waters where there were visible trees rising out of the water, and presumably tree stumps hidden beneath the water. The vessel violently struck something in the water, which caused the vessel to flip, throwing Plaintiff into the water. Plaintiff lost consciousness, and sustained severe and disabling bodily injuries.

4.3 When he regained consciousness, Plaintiff was trapped in an air pocket under the boat. He swam out through a window, and up to the surface. He then began to float down the river. He spotted a small village and was able to make his way to the bank and up onto land. A small fishing boat, passing by, picked him up and took him to a village where he sat for hours, waiting for Defendant’s rescue boatto arrive. Defendant’s rescue boat transported Plaintiff back to Defendant’s work site from which he had departed in the aluminum boat. He was then transported by helicopter to Defendant’s main gas processing plant. From there, Plaintiff was transported by fixed wing aircraft to Lima, Peru, where he was taken by cab to a hotel. Plaintiff stayed at the hotel for roughly 6 hours, before flying by commercial airline back to the United States.

Petrobras America, the named defendant, simply says it’s never owned or operated anything in Peru, so quit bothering the poor saps. Sorry but this story doesn’t have much in the way of a cathartic conclusion. The case is ongoing in Houston.

Peru calls PetroPeru pres in over oil spill

El Comercio says the president of PetroPerú has to go answer questions before the legislature because his company spilled oil.


The president of the board of Petro-Perú, Pedro Touzett Gianello, was called to answer questions about  the oil spill in the Cuninico, district of Urarinas, in the Loreto region, according to an announcement from the Environmental, Ecological, and Andean, Amazonian and Afro-Peruvian People’s Commission in Congress.

Not exactly a month in the slammer, but better than what we see with most state enterprises, or even private companies, when they pollute. So, good for Perú.

Gosh, Peru may fine state oil company big bux for oil spill

Venezuela and Ecuador, especially, could learn from this. Peru fines Petroperú for spilling oil. Real fines, too — max fine could be over US$50 million.

The Environmental Evaluation and Investigation Organization (OEFA) says it has started an administrative sanction proceeding against Petroperú for the 30 June 2014 oil spill in Segment I of the Oleoducto Norperuano, near where it crosses the Cuninico river, in the Urarinas district, province and region of Loreto.

It says the possible infractions that took place include spilling oil, which can be fined as much as 10,000 tax units, or about 38 million soles ($13.5 million).

The state oil company also may have failed to comply with its environmental management instrument, first by failing to maintain the pipeline, which can be fined as much as 57 million soles ($20.3 million) and second by not having detected and controlled the leak promptly, which can also be fined as much as 57 million soles.

More here, in Spanish.

No wonder the government wants to strip the OEFA of its power.

Another day, another Amazon oil spill

PetroPerú tries its hand at environmental devastation. Environmental Health News writes it up in English:

On the last day of June, Roger Mangía Vega watched an oil slick and a mass of dead fish float past this tiny Kukama Indian community and into the Marañón River, a major tributary of the Amazon.

Community leaders called the emergency number for Petroperu, the state-run operator of the 845-kilometer pipeline that pumps crude oil from the Amazon over the Andes Mountains to a port on Peru’s northern coast.

By late afternoon, Mangía and a handful of his neighbors – contracted by the company and wearing only ordinary clothing – were up to their necks in oily water, searching for a leak in the pipe. Villagers, who depend on fish for subsistence and income, estimated that they had seen between two and seven tons of dead fish floating in lagoons and littering the landscape.

“It was the most horrible thing I’ve seen in my life – the amount of oil, the huge number of dead fish and my Kukama brothers working without the necessary protection,” said Ander Ordóñez Mozombite, an environmental monitor for an indigenous community group called Acodecospat who visited the site a few days later.

Read it all here.

And on July 2, PetroEcuador had a freakishly similar situation. Amazon Watch offers the details: Continue reading

Anyone in favour of Peru giving away the store to Doe Run?

Otto gives some calm, measured advice to the government of Peru — primarily to “Grow some balls one time, will you? Doe Run Peru has failed to meet its contractual obligations… Screw ’em. Fuck ’em. …take over the plant, Ollanta.”

Then I get this press release from San Francisco, which says more or less the same thing, but in Spanish press release-ese. I’m not usually one to just run a press release here, but what the heck, maybe this will help the PR get seen:

El Congreso del Perú no debe otorgar extensión sin condiciones a Doe Run en La Oroya

Empresa usa tácticas legales y políticas cuestionables para presionar al gobierno

San Francisco, EEUU – Mientras que el Congreso peruano se encuentra considerando una norma para otorgar a la empresa Doe Run Perú (DRP) una extensión del plazo para el cumplimiento de las obligaciones del Plan de Adecuación y Manejo Ambiental (PAMA) por tercera vez, DRP usa tácticas legales cuestionables para presionar al Perú. El gobierno peruano no debe permitir la reapertura del complejo metalúrgico de La Oroya sin que la empresa cumpla de antemano sus obligaciones ambientales, se pronunciaron el martes las organizaciones internacionales Earthjustice y la Asociación Interamericana para la Defensa del Ambiente.

Continue reading

Peru: Offshore oil exploration blamed for dolphin deaths

A circumstantial story, but it’s certainly worth asking whether high dolphin deaths come from seismic exploration for offshore oil. And yes, there are many other possible causes — but oil exploration is something that can be halted, paused or done differently if needed.

The Seattle Post-Intelligencer has the story. There is some BS in the post, and a lot of speculation, but it’s very much worth reading.:

The recent uptick in dolphin deaths is also correlated with oil exploration off Peru’s coasts, a serious double whammy for cetacean populations….

Turn on your BS filter and check it out.

BP spill lessons for Latin America?

Three weeks ago I was snorkeling over some of the best live coral I’ve ever seen at Puinare, a half hour in motorboat off the beach in Puerto La Cruz, Venezuela. I was in awe at the tens of thousands of blue minnows, the plentiful parrot fish, the little christmas-tree-shaped organisms that disappeared in a blink with the slightest disturbance in the water. In March, 131 oil tankers loaded up with cargo in Puerto La Cruz and the adjacent port of Jose and steamed out to sea. Thirty miles offshore, PDVSA just completed its second and third wells in the Mariscal Sucre natural gas development project. And in waters almost as lovely, a few thousand km south, Petrobras and partners are drilling the biggest oil find in decades, in conditions similar to the Gulf of Mexico.

The big BP oil spill in the Gulf of Mexico is a reminder of what can happen when oil and water mix. This is the same kind of drilling that is supposed to be the future of Brazil. Shallower-water offshore reservoirs are under development or exploration not just in Venezuela but in Colombia, Guyana, Suriname, Argentina, Chile and Peru — that is to say, every South American independent state with a coastline, other than Ecuador — plus Mexico. You also find talk, if not much action, about offshore drilling in Cuba, Aruba and Barbados, among other islands.

So what’s the lesson here? Obviously, the U.S. screwed up its regulation and control. Is there anything that South America and the Caribbean can learn from that error?

The U.S. has a big, widespread and powerful environmental movement with the money and technology to monitor water quality independent of the government. This is generally absent in Latin America.

The U.S. has laws allowing independent environmental lawsuits against polluters, without the cooperation or even notification of state authorities. I’m not aware of anything like that here.

Oil companies operating in the U.S. are private, while all of the biggest explorers in South America and Mexico are state-controlled.

Given these differences, I’d say that the biggest lesson is probably the need for extreme independence of environmental authorities and protection for whistle-blowers. Not likely to happen.

One advantage in South America and Mexico is that private oil companies are used to being pushed around, while in the U.S. they are used to having control. Maybe state oil companies should be treated the same way.

Why are my lungs burning?

Countries across Latin America and the Caribbean are figuring out that slashing the sulfur content of their diesel fuel can be good for people. Curacao is the latest to shift to 500 ppm (0.05%) diesel while in Chile one can buy diesel with as little as 50 ppm — a policy that it started in 2004 in Santiago and is extending the length country. (And the breadth, but that’s easier.) In Colombia, the nationwide maximum is now 500.

Governments have set 50 ppm limits in some cities in Argentina, Brazil, Peru and Colombia, Liisa Kiuru, executive director of the International Fuel Quality Center, said today in a phone interview. Her organization tracks fuel quality standards worldwide.

In Venezuela, we don’t need no stinkin rules. We pay with our lungs, rather than our wallets.

Venezuela has the world’s cheapest diesel, at 2.8 cents a gallon*, less than 1% of U.S. prices. This probably helps with economic development, to a point — imagine being able to take a 12-hour ride in a privately owned luxury bus with high air conditioning half-way across the country for $10. However, it also has a host of less desirable effects, including the lack of an incentive to cut truck traffic by using trains or proximity. And people use diesel generators rather than conservation in order to reduce demand on the power grid.

Perhaps the most insidious problem with the country’s diesel price is that it leaves Venezuelans breathing much lower-quality air. Our diesel is 0.5% sulfur, or 5000 parts per million. That’s 10 times higher than in Colombia, and 100 times higher than in Santiago de Chile. Most of the time you don’t notice the stench, even in Caracas, where a steady wind out of the east flushes our toxic cloud out to El Junquito and beyond. It’s only when trying to ride a bike or run on Francisco de Miranda or Urdaneta or Fuerzas Armadas, the big bus-choked avenues, that you realize just how thick the sooty, sulfrous cloud can be. Flying out of Caracas, you can see the plume from the Tacoa generating station, which burns not only diesel but 3%-sulfur fuel oil. I’ve seen the plume extend 75 miles (more than 100 km) to Valencia.

I’ve had construction going on next to my house for months. Now that I’m freelancing and home during labor hours, I have the pleasure of experiencing the toxic gas cloud from the steam shovel all day long. My lungs burn. It’s frustrating to know that the technology and money exists to clean this up, with benefits that range from lower public health costs to, who knows, maybe more Olympic medals — but it doesn’t happen.

* (5.4 bolivar cents/liter) * (3.78 liters/gallon) / (7.3 bolivar cents/U.S. cent) = 2.8