WASHINGTON, Jun 7 (IPS) - A controversial gas pipeline in the pristine heart of the Amazon forest that has ruptured six times since its inception received a clean bill of health this week from the main financial backer, the Inter-American Development Bank (IDB), drawing scepticism from indigenous groups and international environmentalists.

The results of the two IDB audits contradict a study conducted last year by E-Tech, a California-based non-profit technical research firm, which found that the quality of materials and construction procedures used in the Camisea gas pipeline was substandard and caused the pipeline to repeatedly leak into the ecologically sensitive area.

The author of the E-Tech report, Carlos Salazar Tirado, is a certified pipeline welding inspector who examined sections of the Camisea pipeline during the construction phase in 2002-2003.

The report's allegations prompted the IDB to freeze further funding to the companies building the Camisea pipeline in the Peruvian Amazon.

The companies, led by Texas-based Hunt, SK Corporation and Repsol YPF S.A., are seeking a 400-million-dollar loan to partially fund a liquid natural gas terminal and other infrastructure on the coast that would turn Peru into an exporter of liquefied natural gas.

The IDB had already approved a 75-million-dollar loan for the transportation component of the project in 2003. In 2002, the Bank provided a five-million-dollar loan to the government of Peru for capacity building and oversight of the project.

The gas will be exported to markets in Mexico, and possibly Chile and the United States as well, for re-gasification.

But after the findings of the E-Tech report were made public, the IDB promised to wait for the results of its own audits before it approved more money.

Now that the IDB's two audits, both announced this week, appear to vouch for the integrity of the pipeline, more funds are expected to be released soon.

The first review commissioned by the IDB, an environmental and social audit, was carried out by ICF International. It found "generally acceptable performance" in the four areas of environmental protection, social, health and occupational safety concerns, and contingency planning and emergency response.

It also said the two companies behind the project had "effective" performance in the areas of erosion monitoring, re-vegetation and biodiversity.

The second audit commissioned by the IDB studied the pipeline's physical integrity and was prepared by Exponent, Inc.

That audit attributed the cause of the six spill incidents to geologic conditions rather than shoddy workmanship and materials. The auditors said that geotechnical stabilisation measures have reduced the risk.

The IDB says it commissioned the audits as part of its review of funding for the project, which has drawn intense criticism for its impacts on the local environment and social rights of indigenous residents.

This week, the bank aired the results in public meetings on Camisea, held every six months and alternating between Lima and Washington.

More than 70 representatives from different interest groups, non-governmental organisations (NGOs), government agencies and private sector companies attended the meeting.

Despite the IDB's assurances, environmental groups and indigenous representatives remain convinced that the Camisea project is one of the most damaging in the Western hemisphere

They say its negative impacts include deforestation, gas spills and the loss of fish on which vulnerable local indigenous populations depend, including some of the last native communities still living in isolation anywhere in the world.

The advocacy groups fear that without resolving these issues, the IDB's potential 400-million-dollar loan for Camisea's second phase could impact an even vaster area of the Amazon and its indigenous peoples.

Amazon Watch, a group that fought the project, says the audits by the IDB omit fundamental criteria, including damage done to biodiversity and health impacts on indigenous communities.

They say that the environmental and policy consultants ICF relied on in its 300-page study on "management indicators" overlooked alleged health and human rights abuses against the native communities of the Lower Urubamba river basin of southern Peru.

They also say it lacks concrete data about impacts on the area's fragile ecosystem.

"We feared this audit would be a rubber stamp for pushing forward with financing the second phase of Camisea, regardless of whether the problems with the first phase were resolved," said Maria Lya Ramos, of Amazon Watch. "Upon initial review, it looks like we were right."

The Camisea natural gas project is one of Latin America's key energy infrastructure projects, involving the extraction, transportation, and distribution of natural gas for domestic consumption and export.

The 1.6-billion-dollar original project is based in a remote, ecologically fragile tropical area, the Lower Urubamba Valley of the Peruvian Amazon.

"We have been calling for a truly independent audit for years," noted Aaron Goldzimer from Environmental Defence.

"Our suggestion was to recruit an impartial panel of eminent experts, but instead, according to yesterday's presentation, we get an audit on whether plans and systems are in place, but say s nothing on project impacts," he added after the conclusion of the meetings in Washington.

© 2007 Inter Press Service