Peruvian Congress awards Lot 192 to Petro-Perú

Last Thursday, ­­­the Peruvian Congress approved a bill allowing state-owned oil company Petro-Perú to exploit the country’s largest oil field, known as Lot 192. The bill passed overwhelmingly and was lauded by Loreto Governor Fernando Melendez, who had helped leaded the protests by the local communities calling for the oil field to be run by Petro-Perú.

Nonetheless, the ultimate legality of the bill has yet to be determined, and the Loreto protestors have vowed to maintain their protest until the government confirms the decision. Victor García Toma, ex president of the Constitutional Tribunal warned that the protestors are right to be worried.

He explained that there are a number of legal obstacles to Petro-Perú being able to operate and exploit Lot 192. He believes that although the law was passed with good intentions, it is fooling Peruvian citizens into believing that the situation is resolved, which it is not.

Peruvian business journal El Comercio published an analysis piece on the lessons that the country can take from the disastrous auction of the rights to operate Lot 192. The article argues that the failed auction of Lot 192 has only aggravated the terrible crisis that the Peruvian oil industry is experiencing. The Peruvian government’s decision to overrule a contract signed with Pacific Exploration & Production calls into question the Peruvian government’s respect for investors’ rights and will scare away foreign investment, which the industry desperately needs.  

Lot 192 is not Peru’s only oil field, and the rocky auction process will make it more difficult for the country’s upcoming oil auctions.