Page 5 - LatAmOil Week 31 2021

LatAmOil COMMENTARY LatAmOil

He justified this shift by saying it would allow Energy (Canada) gave up in February 2021.
the government to have more control over the He is now working to take control of Block 8,
retail price of fuel, which is a politically sensitive a site that was yielding 8,000 bpd before it was
matter in Peru, and prevent monopolies from dropped by Pluspetrol (Argentina) last year.
taking advantage of consumers. Nevertheless, the president has indicated
He also indicated, though, that this shift that he wants to widen the scope of these acqui-
would not involve forced nationalisation of the sitions. Ivan Merino, the country’s new Minister
entire oil and gas industry. “We do not propose of Mines and Energy, said during a meeting with
to nationalise the economy,” he declared during representatives of PetroPerú’s unions earlier this
his inaugural address. “It is false that we want to week that Lima wanted to move “aggressively” in
expropriate.” this direction, Argus Media reported.
Lima will seek to regain control over some of Oscar Vera, who represents labour interests
the natural resources that passed into the hands on the NOC’s board of directors, responded Peru’s new
of foreign investors in 1990s, he continued, but positively to Merino’s statements. “We are very
PetroPerú will have to compete with other com- pleased the minister met with us. It was a first for presidential
panies operating in the sector, including private the company and a good start, with the govern- administration
sector entities. The government will not finance ment listening to what PetroPerú’s workers want
the NOC’s operations with budget funds, he for the company,” he told Argus. “PetroPerú is a has indicated
added, as it expects PetroPerú to be a participant large company with decades of experience. We
in the market and work to make a profit. were removed from some parts of the business, that it wants to
but that does not mean we cannot operate them.”
Lack of detail widen the scope
The president did not say on July 28 exactly how Legal reform – but for how long? of acquisitions
he intended to achieve these aims. In practical terms, this shift may involve
For example, he did not say exactly how Lima legal reforms, such as amendments to the by PetroPerú
expected to cover the costs that the proposed constitution.
changes would inevitably entail. He did not The current version of Peru’s constitution
address the question of how PetroPerú might be was adopted in 1993, during the administration
compensated for losses incurred because of fuel of former President Alberto Fujimori (whose
price controls – or how the company expected daughter Keiko, as it happens, narrowly lost
to pay for the private sector assets it hoped to this year’s election to Castillo). This constitu-
acquire. tion laid the groundwork for the privatisation of
This lack of specificity is not exactly a warn- assets formerly assigned to PetroPerú, including
ing sign. Castillo was speaking during his inau- upstream oilfields, midstream transportation
gural address, which covered a very wide range systems and downstream retail sales units, and
of topics and which was designed to introduce the new president has said he is ready to propose
– not to elaborate, but to introduce – his policy changes to it.
agenda to the country. In fact, he said explicitly during his inaugural
He is also coming to office at a time when address that he intended to present a constitu-
PetroPerú has already been working on its own tional reform bill to Parliament. Peru cannot be
to regain some of the capabilities it shed in the “condemned to remain a prisoner of this 1993
1990s. As Argus Media noted earlier this week, Constitution,” he asserted.
the NOC’s current CEO Eduardo Guevara has Even so, it is not clear yet that initiatives along
made a point of seeking to acquire upstream these lines will have long-term staying power.
assets surrendered by private sector companies. Castillo has pledged to step down in mid-2026,
Within the last year, Guevara has led PetroPerú’s at the end of his first and only term in office. By
successful efforts to lay claim to properties that then, the national political climate, which is
outside investors no longer want – such as Block already contentious, may have shifted in another
192, a 10,000 barrel per day site that Frontera direction. ™

(Photo: PetroPerú)

Week 31 05•August•2021 www. NEWSBASE .com P5