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Interview

with Gonzalo Crosby, Country Manager, Chicago Bridge & Iron (CB&I)

02.05.2011 / Energyboardroom

What were the main challenges for CB&I in completing the liquefaction plant for the Peru LNG project?

Peter Rano: Peru LNG was a successful endeavor not only because we managed to finish ahead of schedule and under budget, but also because we exceeded our social and environmental commitments by implementing effective social programs that would allow for long-term development of the regions. The environmental specifications of these standards were set out in the Environmental Impact Study (EIA) that is submitted for review to the authorities before the project even begins. There were many commitments in the EIA that we were obligated to meet and they were critical to the success of the project. These commitments fell under four main pillars: social, economic, cultural and environmental, and these are at the base of our extensive social responsibility program which is ongoing today. Our vision for the social responsibility program was to provide sustainable development to the areas that would be affected by the project.

This was a shared vision with Peru LNG and it was something that we took into consideration even during all engineering and construction aspects of the project. Key to this success was the spirit of partnership that was forged between CB&I and Peru LNG from the outset of the project, under which both companies were determined to bring development to the country beyond the immediate effects of the natural gas industrial complex we were building. This was an element that was important to the shareholders of Peru LNG as much as it was to CB&I who has a long history of executing these kinds of projects around the world.

Aside from the environmental and social challenges, this project also involved major logistical challenges in bringing the necessary material and people to the Melchorita site, which is located in the middle of the desert. For example, most of the large equipment had to be transported from the port of San Martin for seven days on the Pan-American Highway. This involved building four river crossings and timing our passage through major towns and cities, such as Chinche, during the night so as to not disturb their daily activities. In total we had 66 cargoes that traveled this route and our commitment was to do this without adversely affecting the cities that we passed through. This meant we had relocate power and telephone lines, as well as some pedestrian bridges that crossed over the highway.

You mentioned the numerous commitments that were set out in the EIA. What are some of the benefits generated by CB&I’s operations that brought positive change to the local communities affected throughout the project?

T o begin with, we developed a training program for the indigenous communities that aimed to impart them with skills that would be useful in the long term and that could be sustained by them once we had left the area. CB&I spent over 1 million man-hours training the local people. Our workforce was approximately 90% Peruvian. Peruvians are great workers with a strong work ethic, and we were very blessed to have these people working for us. All of the non-skilled workers on the project came from the nearby towns of Chincha and Cañete and we trained them with useful skills such as food preparation, that will be marketable in the future. Many of these workers have made careers in the company since being hired by CB&I and some have even been sent internationally to other projects in countries like Colombia, Panama and Ecuador. In total we had almost 14,000 Peruvians that were hired during the execution of the project and 5,000 employed at one time at the peak of the project. Overall our good labor relations with the local people and the unions were major factors in making this project a success.

Further to CB&I’s labor efforts there were also multiple social, economic and cultural projects that were important for the local people. One notable example was our sponsoring of an archeological review of the Inca Trail between the towns and Chincha and Cañete. There is a book that was published that illustrates the project. The local communities were very appreciative and supportive of such efforts because this was a part of their heritage. On the economic front we also had some micro-financing projects that help developed local industries. For example, all of the pants that were worn by the workers on-site were manufactured by local textile workers to whom we provided financial resources and equipment for them to expand their operations to supply our entire demand. Today these people have grown their business so much that they are now selling their products in Lima. This project was such a success that the International Development Bank reviewed it and is now using it as a model for similar projects in other countries. It is these kinds of stories that our financial partners and investors love to hear, because it demonstrates the added value that the project brings to the country outside of the oil & gas industry.

What does the Peruvian operation represent for the overall CB&I group today?

Gonzalo Crosby: The Peru LNG project was one of the largest projects for the company and because of that importance the entire company was focused on its success, which is why they sent Peter, our most senior Project Manager, to oversee the project. Because of the Melchorita project the company has now decided to stay in Peru for the long term. CB&I has been here for fifty years and we look forward to participating in other projects in the future. Peru is an important market for our company and we wish to stay here to accompany the growth of the country and of the oil & gas industry which will remain our focus.

What is CB&I’s strategy for continued growth in this market and where would you like to take the company in the next 5 years?

I think our main advantage that will drive the growth of the company here in Peru has been the exposure we obtained from the Peru LNG project. Working with local people and training them has been very important in terms of building our credibility and establishing a reliable workforce that will be useful for us in the future. Similarly, our community programs have also enhanced the image of CB&I in the eyes of authorities, partners and the local people of the areas that we work in. They believe that we are here to bring growth and progress to the country and not simply to make a profit by completing a project. This reputation has extended beyond Peruvian borders and was a primary reason for being awarded a project that we are currently undertaking in Cartagena, Colombia. Similarly we are also undertaking two projects with refineries, one for Petroperu in Talara and the other for Repsol at La Pampilla.

Another factor that will assist our growth in the future are the partnerships that we have developed with local construction companies such as Graña y Montero and COSAPI, with whom we are also working with in Colombia.
I want to ensure that CB&I stays in Peru for the long term and grows in parallel with the country and takes advantage of the endless opportunities that are yet to be explored.

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