Peru to cancel natural gas pipeline contract

Peru plans to cancel a contract for construction of the Southern Peruvian Gasline (GSP) after the consortium hired to build it failed to meet its financing deadline. Odebrecht SA, the subject of a multinational corruption investigation, led the consortium with a 55% stake. Enagas SA held 25% and Grupo Grana y Montero 20%.

The 620-mile GSP line would have used 32-in. OD pipe to transport 800 MMcfd of natural gas from Camisea across the Andes to the Pacific coast.

Odebrecht says it will over the next 20 years pay $2.1 billion in reparations related to the corruption to Brazil, the US, and Switzerland. Of this, 85% is for Brazil, 10% the US, and the remaining 5% for Switzerland. The amount owed Peru is still being calculated.

Sempra Energy in November 2016 withdrew from negotiations to buy Odebrecht’s share of GSP, citing the Peruvian government’s “inability to provide necessary assurances that the concession would not be cancelled due to alleged legal violations by the seller.”

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