Petroperu Fined, President Ousted Over Oil Spills In Amazon

Reuters

LIMA, June 30 (Reuters) - The Peruvian government dismissed the head of Petroperu, German Velasquez, and fined the state-owned energy company about $3.5 million after the third oil spill in the Amazon this year from its four-decades-old pipeline.

Energy and Mines Minister Rosa Maria Ortiz said Petroperu had been illegally pumping crude through the 1,106-kilometer (687-mile) pipeline, which was supposed to have been closed for repairs following two spills earlier this year.

"That's a serious offense and that's what must be sanctioned," Ortiz said on local broadcaster RPP.

Velasquez, whom Ortiz said formally resigned on Tuesday, declined to comment.

Petroperu denied this week that it had been transporting oil through the pipeline but declined to comment on where the leaked crude in the latest rupture came from.

Environmental regulator OEFA said Petroperu would have to pay about $3.5 million for the latest spill of about 600 barrels, detected on Friday, and for the company's "repeated and systematic failure of its environmental obligations."

Public outcry over persistent problems with the pipeline could build pressure for reforms at Petroperu during the government of centrist President-elect Pedro Pablo Kuczynski, who will take office on July 28.

There have been 23 oil spills from the pipeline since 2011, according to the ombudsman's office.

The two ruptures earlier this year spilled some 3,000 barrels in the remote Amazonian region of Loreto, polluting rivers and prompting an indigenous community to hold Petroperu officials hostage to press for aid.

OEFA said earlier this week that it had fined Petroperu about $3 million for a spill in 2014, raising the possibility of additional fines for other past leaks that could hurt the company's bottom line at a time of low crude prices.

Petroperu mainly transports and commercializes oil products in Peru, a relatively small producer of crude. Support had been growing for the company to take part in oil production through partnerships with private companies before this year's spills.

Kuczynski, a 77-year-old former investment banker, will replace outgoing President Ollanta Humala, a former left-leaning military officer who backed off his initial plans to try to strengthen Petroperu in the style of Brazil's Petrobras.

It is unclear if a new Petroperu chief will be named before the end of Humala's five-year term next month.

Before operations were suspended in February, Petroperu's pipeline transported about 5,500 barrels of oil per day to its Talara refinery, mostly from block 192, operated by Pacific Exploration & Production Corp.

(Reporting by Mitra Taj; Editing by Sandra Maler)

Copyright 2016 Thomson Reuters. Click for Restrictions.

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