Page 4 - LatAmOil Week 33 2021

LatAmOil C O M M E N T A R Y LatAmOil
PetroTal’s Bretaña oilfield (Photo: Rumbo Minero)
Peru prioritises ESG issues
Energy Minister Ivan Merino has indicated that President Pedro Castillo will link permits and approvals to developers’ willingness to invest in social projects that help host communities
WHAT:
Peru’s new government is keen to protect the interests of rural and indigenous communities from oil, gas and mining companies.
WHY:
According to Merino, investors have responded positively to Lima’s call for giving all projects “a new social face.”
WHAT NEXT:
The implications of this shift are not fully clear, but oil and gas compa- nies should brush up on ESG issues.
PERU’S new government has given clear indica- tions that it intends to pay close attention to the impact of natural resource development projects on host communities.
The country’s new Energy Minister Ivan Merino stated the matter plainly, saying during an interview with Bloomberg on August 15 that the administration of President Pedro Castillo would link approvals and permits to developers’ plans for investing in social welfare projects that will benefit local communities. “The president has already said it: Projects with social profita- bility go [forward]. Those that do not have social profitability simply do not,” he remarked.
Merino was speaking to the news agency about subsurface mining, not about oil and gas. However, he has also made clear that Lima will treat the hydrocarbon industry similarly, putting community interests front and centre.
He did not say exactly what this shift might entail. Nevertheless, his remarks demonstrate that foreign investors working at in the Peruvian
oil and gas sector will have to assign a much higher priority to ESG (environmental, social and governmental) issues than they have done previously.
Social problems affecting permits
In the interview, Merino talked about the need for the government to work with foreign inves- tors in mining projects. He indicated that Cas- tillo was not looking to push private firms out of the extractive sector through nationalisation or other means and said that officials in Lima were working to press ahead with initiatives that have languished because of bureaucratic holdups.
“We recognise that the state has not been present, that the best way forward is direct, with information exchange, so that there are no dis- tortions,” he told the news agency.
He also stressed, though, that concerns about the impact of subsurface resource development had contributed to the lag in approval for min- ing projects.
P4
w w w . N E W S B A S E . c o m Week 33 19•August•2021