On Wednesday, Peruvian oil regulator Perupetro announced
that Peru would reduce royalties on its oil and gas production from its current
level of 20% to just 5% in order to try to stimulate investment in oil
exploration. According to Perupetro president Rafael Zoeger, this move should
help increase interest in the upcoming auction of new Peruvian oil contracts.
He explained during a press conference, “I'd rather get 5
percent on some production than 20 or 30 on none. We want to find out how to
design royalties for the current context of low prices.” Peru will experiment
with a sliding scale of royalties, charging a lower rate for concessions that
are more expensive to operate and develop.
However, the contract for Peru’s biggest oil field, Block
192, will likely go to Peruvian state-owned oil company Petroperu. Zoeger told
the press that his organization is drawing up a 30-year contract for Petroperu
to operate the field once Pacific Stratus Energy’s two-year contract expires. There
is still much work left to be done in the negotiations, as Petroperu is
strapped for cash and is refusing to pay for Block 192’s $345 million in assets
and installations. On the other hand, Perupetro wants up to $500 million in
investment at the oil field to increase production above it’s paltry current
level of just 10,000 barrels per day.
In mining related news, Andina
reported on comments made by Carlos Gálvez, president of the Peruvian National
Society for Mining, Petroleum, and Energy (SNMPE). Gálvez noted the current
lack of violent social conflicts over mining projects in Peru and argued that
now is the time for the industry to go on a public relations offensive and win
over the Peruvian people by promoting the positive impact that mining has on
the economic development of the country.
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