Page 13 - MONTT LATIN AMERICAN MAGAZINE, MARCH, 2018, ENGLISH

A commission of the Peruvian Congress passed the Reform of the Organic Law of Hydrocarbons, with which the industry expects to free up investments for about 47 billion dollars in 2021. The initiative proposes the modification of 23 articles of Law No 26.221, dictated in 1993.
The provision seeks to “promote the hydrocarbons industry in the country” and encourage “the development of exploration and exploitation activities” of the resources of the said subsector in the national territory.
The authorities maintain that when the Organic Law of Hydrocarbons is promulgated, several contracts could be extended and also will grant more facilities for exploration. The investments for the so-called upstream stage, that is, exploration, development and production amount to 44 billion dollars. This includes discovery of oil resources (29 billion dollars), of natural gas resources (14 billion dollars) and exploitation of lot 192 (615 million dollars). The so- called lot 192 corresponds to an area of 290 hectares, which contains 17 percent of Peru’s oil, one of the main oil-producing areas of the country.
Regarding the so-called downstream stage, that is, crude refining, processing of natural gas, the sum reaches the three billion dollars. The quantity includes the modernization of state-of-the-art equipment of the Nor Peruano Pipeline, the Siete Regions project and the storage infrastructure of LPG and Diesel B5 as energy security.
It was announced that a new project of royalties for oil exploitation is being prepared, which will help to encourage these investments.
Environmentalist Critics
The Peruvian Society of Environmental Law, SPDA regretted, however, that the issue of the environment does not have great importance in the initiative. The leaders of the organization expressed that no one should forget the history of the repeated spills that have occurred in recent years in the Amazon, due to the operation of the Norperuano Pipeline, the exploitation of hydrocarbons in Block 192 or, more recently, the gas spill in Cusco.
“The State and the private sector must ensure that the hydrocarbon activities are executed, not only in compliance with the environmental and social legal obligations
established in the legal framework, but they must do so with complete diligence in order to regain confidence on the part of the populations. The State will have to guarantee the right to a healthy environment and its well-being, and ensure the sustainable development of the country,” said the entity.
It also proposed the inclusion of key issues related to the use of information resulting from the Early Environmental Assessment (EIA), the promotion of the process of prior consultation by PeruPetro, the extension and termination of exploitation contracts and their linkage to the EIA, the creation of a Technical Assistance Fund for citizen participation and the anticipated termination of contracts for environmental breaches, among others.
Civil Repair
In other subjects, the Peruvian Congress plenary is debating the bill to replace Urgent Decree 003, which seeks to ensure the immediate payment of civil compensation to the State, in cases of corruption, such as that involving Odebrecht company. The initiative has already been approved in the Justice and Economics commissions.
The document contains important aspects to boost the production of the country, without affecting the fight against corruption when accomplished by legal persons. In this way, the State seeks to guarantee the predictability of organizations, so that they obtain approval of their letters of guarantee and the necessary financing of their works. To ensure that the new norm is fully in force and lacks any type of inconsistency with the existing regulations, the Government took care to adjust it to the legal framework and the scope established by the Constitution itself. Thanks to this work, the Executive and the Parliament worked in a joint way so that the provision could be applied in a timely manner.
The Minister of Economy and Finance, Claudia Cooper, said that the proposal is a good sign for economic agents, inside and outside the country, because “we achieved a fair balance between what the frontal fight against corruption is and the dynamics of our economic model “.
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