Analysts say a parallel pipeline could sap demand for Odebrecht's project, worth up to $5.8 billion. It has been held up partly over supply guarantees from the Camisea gas fields, contract terms, and sources of financing. Congressman Teofilo Gamarra, head of the energy and mining commission, told RPP radio that the government's planned pipeline means Odebrecht's "no longer makes sense".
"Their pipeline doesn't have certified gas reserves," said Gamarra. "It's like a discotheque that has an operating license but no clients, drinks or music." The government said it would be better able to control the pipeline's construction because it would indirectly finance it, in part through a new fee on consumer electricity bills.
The administration of President Ollanta Humala has called the need for a pipeline "a national emergency". Some lawmakers expressed concern the move would waste Peruvians' money while alienating foreign investors. "It's an important project, but it doesn't help us do business with transnational companies," Congressman Yonhy Lescano of the Popular Action party said on Twitter.
Earlier this year Humala convinced the Camisea gas consortium that manages most of the country's natural gas to divert more of it to the domestic market instead of exporting it in liquid form - part of his campaign promise to make affordable fuel more widely available. The law passed on Thursday also could help move forward Humala's plan to develop a gas-fed petrochemical complex that will churn out fertilisers and explosives.