Page 5 - LatAmOil Week 33 2021

LatAmOil COMMENTARY LatAmOil
Local and indigenous communities’ relation- ships with developers have not always been smooth, and these tensions have affected the government’s handling of approvals and per- mits, he said.
But he also reported that mining companies had responded positively to Lima’s call for a new approach to host communities’ concerns. “All companies are happy, so far,” he told Bloomb- erg. “We all agree that all projects must be given a new social face, that we need a new pact.”
He did not say exactly what this agreement entailed, but he did note that developers had signaled their willingness to work with Lima by paying off some of their back taxes.
Clarifying the rules
Merino went into greater detail about the gov- ernment’s plan for prioritising ESG issues in the hydrocarbon sector in a separate interview with Argus Media.
In that interview, published earlier this week, the energy minister attributed the slowdown in exploration for natural gas in Peru to social problems stemming from mistakes by private firms and inefficient management of projects by the government. He did not level any specific criticisms, but he asserted that both the pub- lic and private sectors ought to work harder to uphold agreements with host communities.
“We need to guarantee that agreements that have been reached by the state or companies withcommunitiesarerespected,”hetoldArgus Media. “Many agreements have been signed, but few have been implemented. This leads to resentment. We need clear rules, not favoura- ble or unfavourable rules, to guarantee a stable operating climate that allows for exploration and production.”
Supporting gasification
The minister went on to say that the Castillo
administration would have to take a different approach on this front to realise its ambition of making natural gas available to larger numbers of consumers. “The goal is to increase the use of gas in the country, and we want to make sure the population has access to gas at a reasonable price,” he declared.
This objective will remain out of reach if the pace of upstream exploration work remains sluggish, he said. “We need to figure out how to get this done,” he remarked.
Argus Media noted that Peru had not discov- ered any new gas reserves in the last few years, and Merino reiterated that he wanted to see more exploration. The government would like to see the national oil company (NOC) PetroP- erú, as well as privately-owned companies, step up the search for gas, he said.
“The first thing is exploration. We need to explore to find reserves,” he remarked. “This can be done by both the private and public sector.”
Change of course
Merino’s statements to both Bloomberg and Argus Media represent a significant change in policy, as Peruvian authorities have often sub- ordinated local concerns to efforts to maximise profits from natural resource extraction.
However, the shift should not come as a sur- prise. Castillo has championed the interests of the rural and indigenous communities that have been adversely affected by oil, gas and mining projects,andhemadeclearduringhiscampaign that he was not satisfied with developers’ past attempts to satisfy these interests.
And now his energy minister is making clear that this issue will play a role in the Castillo administration’s future approach to oil, gas and mining projects. As such, foreign firms working in Peru’s hydrocarbon sector (or looking to do so) ought to brush up on ESG issues before seek- ing permission to drill or dig. ™
Foreign companies working in Peru’s oil and gas sector ought to brush up on ESG issues
Castillo has championed the interests of rural and indigenous communities (Photo: Ministry of Energy and Mines)
Week 33 19•August•2021 w w w . N E W S B A S E . c o m
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