Conflict resolution in sight for Peruvian oil sector

An end to the Peruvian oil sector’s long-running conflict with the indigenous groups in the Loreto region finally appears to be in sight. On Tuesday, Ana Jara, the head of the Presidency of the Council of Ministers (PCM) announced to the press that an agreement was signed between the Peruvian government and the leaders of the Pastaza, Tigre, Corrientes, and Marañón indigenous communities, to establish an environmental remediation fund. This first installment in the fund is worth 50 million Peruvian soles, and will provide more than 100,000 people in Loreto with health insurance.

In related news, Argentine oil company Pluspetrol, the main oil company operating in the area, will be fined 37 million soles for pollution it caused in the Loreto region. The operator of Peru’s largest oil field, lot 1-AB, failed to follow environmental remediation procedures, and will pay the price. The Corrientes River in the area is extremely polluted with lead and oil. Pluspetrol however argues that there is no evidence proving that Pluspetrol is to blame for the pollution. Pluspetrol representative Daniel Guerra told El Comercio, “But we have given S/. 40 million to make analysis and improve the health of communities of the Corrientes.”

The Peruvian government is undoubtedly pleased that this long-running social conflict is finally heading towards a resolution. The Peruvian government had been forced to indefinitely postpone the auction for the license to operate the 1-AB oil field due to the clashes between Pluspetrol and the Loreto indigenous groups. However, Luis Ortigas, president of the Peruvian state oil company Perúpetro told Portafolio.co that the oil field would be auctioned off on April 13^th.

In other news related to the Peruvian oil industry, Houston-based BPZ Resources filed for Chapter 11 bankruptcy protection early this week. BPZ specializes in oil and gas exploration in Peru, and has been hit hard by the collapse in global oil prices. BPZ president Manolo Zúñiga told Reuters, “Given the crisis in the industry and the difficulty in finding adequate financing to pay our expiring debt, it’s now necessary that we apply for Chapter 11 protection.”