Congress is expected today to debate, and swiftly approve, a bill authorizing state-owned Petroperu to operate Block 192 in northern Peru.
The bill, drafted by the Energy & Mines Commission from a proposal by congressman Manuel Dammert, comes only a week after the majority of lawmakers voted against such a move.
However, a 48-hour strike in Loreto, including vandalism in Iquitos and the take-over by indigenous communities of the Iquitos airport and oil Block 8, led the congressional commission to revisit the issue.
A week ago, Congress voted against permitting Petroperu to become the operator of the oil concession, following the argument given by the minister of Energy and Mines, Rosa Maria Ortiz, that the venture would not be profitable for the state oil company and that the government’s energy budget has already prioritized the upgrading of the Talara oil refinery on the north coast.
The oil block, operated by Pluspetrol of Argentina until the end of this year, has serious environmental problems along the Tigre River, and an auction held in August brought no bidders.
In private negotiations with three firms in mid-August, the government came to an agreement with the Canadian firm Pacific Stratus Energy for a two-year contract to restructure the operations of the block, which will then be up for bids for a 30-year contract in 2017.
Local communities, however, mistrust a foreign operator because of the oil spills and poor cleanup rates, and believe that Petroperu can be held more accountable. The communities have over time filed a series of complaints not only on the environmental damage but on the government’s lack of initiative to meet the rights of local communities of prior consultation.
Originally called Block 1AB, the oil concession is the largest oil producer in the country, first developed in 1970 by Occidental Petroleum, OXY. The pioneering North Peru Pipeline was built in 1974 to take the oil production from the rainforest over 1,000 kilometers up and across the Andes to the desert coast of Piura at the port of Bayovar.