The Ministry of Energy and Mines (MEM) issued a statement today that chronologically details the events that occurred around the tender for Block 192, Petroperú’s decision not to participate in the exploitation of this block and the benefits it will bring to the native communities, the Loreto region and the country the continuity of operations.
The Block 192 oil tanker, previously called Block 1-AB, has been exploited since the 1970s. The last operator has been the company Pluspetrol Norte SA, whose contract expires today, August 29, 2015.
In May 2015, after two years of negotiation between the Peruvian State and the four Loreto basins, Perupetro SA called an international public tender to grant the Hydrocarbon Exploitation License Contract for Block 192.
The interested, qualified and authorized companies were: Perenco del Perú Petroleum Limited, Peru Branch; Pluspetrol Norte SA and Pacific Stratus Energy del Peru SA
On August 4, 2015, the international tender was declared void, because none of the bidders submitted a proposal. Given this, and in accordance with Article 11 of the Organic Hydrocarbons Law, Perupetro SA called for direct negotiation.The companies summoned by Perupetro SA were the same authorized in the International Tender. Additionally, Omega (Colombia) expressed interest.
The companies summoned by Perupetro SA were the same authorized in the International Tender. Additionally, Omega (Colombia) expressed interest.However,
Pluspetrol and Perenco withdrew from participating, and Omega did not comply with the requirements. In this scenario, Pacific Stratus Energy expressed to Perupetro SA its interest in negotiating the direct award of Block 192 with a temporary Service Contract for two years.
Petroperu decides not to participate
Perupetro SA, in accordance with the policy established by the Executive Power, consulted Petroperú SA if it could participate in a partnership with this company, to operate Block 192 up to 25 percent.
After the legal, technical and financial evaluation, Petroperú SA decided not to participate because it was not profitable. However, he expressed his interest in participating in the next bidding process, which will last for a period of 30 years.
Given the position of the authorities of the Loreto region, the parliamentary debate last Thursday was awaited to eliminate the legal impediment that prohibits Petroperú SA from participating in the direct negotiation for Block 192.
However, given the refusal to discuss and approve this point, Perúpetro SA only has the option of continuing with the processing of the Service Contract for Pacific Stratus, for two years, it is no longer an option to close the oil wells, with the consequent damage of the development of Loreto and its native communities.
For this reason, and in accordance with the Organic Hydrocarbons Law, Supreme Decree No. 027-2015-EM is published today, approving the two-year temporary Services Contract with the company Pacific Stratus Energy del Perú SA
The benefits for the country resulting from this Contract are the following:
Not stop the operation of the wells of Block 192, in order to maintain oil production in this field at approximately 9,500 barrels per day.
Workover six wells to avoid decreased production.
Provide continuity of income from royalties payments to the State.
Give continuity to the payment of the oil canon and excess canon to the Loreto Region.
Contribute 0.75 percent of the oil sales of this block to a Social Fund in favor of the Native Communities of the area, which represent approximately one million dollars annually, a right recognized for the first time in favor of the native communities.
Avoid unemployment that could cause a social problem.
Maintain service contracts with community companies in the area, and,
Avoid further oil imports.
The prior consultation
Parallel to the bidding process, and during the direct negotiation, the prior consultation process was worked on with the native communities of the area of direct influence of Block 192, represented by four federations.
This process was satisfactorily completed with two represented by Feconat and Oriap; however, despite the efforts made, no agreement was reached with the communities represented by Fediquep and Fecinaco.
Notwithstanding this, the State confirms its interest and commitment to meet the demands of the Native Communities in the area of direct influence of Block 192 and develop its best efforts to reach agreements for their benefit.
The agreements reached within the framework of the prior consultation will apply to the Service Contract to be entered into with the company Pacific Stratus, as well as to the future public bidding to be carried out by Perupetro SA, for up to a term of 30 years.
The Ministry of Energy and Mines reiterates the responsibility of the company Pluspetrol Norte SA for the environmental remediation of the affected areas. The state auditing entities, Osinergmin and OEFA, will ensure compliance with the obligations assumed.
The State has established a Contingency Fund with a seed capital of S/. 50 million Nuevos Soles for immediate remediation actions required in the area.