Peru's Congress Questions Pluspetrol Contract Extension

Peru's congress is studying a controversial extension to the expiry date of an exploration and production (E&P) contract for block 1-AB between Argentine oil company Pluspetrol and the state's hydrocarbons investment agency Perupetro, local daily Gestion reported.

In 2001 Perupetro agreed to extend the expiry date of the contract with Pluspetrol from 2007 to 2015, and Pluspetrol committed to investing US$70mn. The congress' work team leader Alejandro Ore argues that Perupetro could have re-offered the block for concession in 2007 for US$400mn.

According to Ore, the contract should not have been extended because the government was in transition, with new President Alejandro Toledo only recently elected. The commission accuses Perupetro of acting "against the interests of the country" and demands that Perupetro take responsibility for its mistake. "Perupetro's technical experts who renegotiated the contract are responsible for this, that is why we have started this investigation to see if we can renegotiate the contract with the private company," Ore said, Gestion reported. But the commission is "politically motivated, and it has nothing to do with Pluspetrol," a Perupetro source told BNamericas.

"By 2007, the proven reserves will be almost used up, so I don't know how they can say that a block like that could get US$400mn," the source said. Pluspetrol paid US oil company Occidental US$50mn for the operating concession in 2000. Since then Pluspetrol has drilled new wells and increased production to 38,000 barrels a day. Pluspetrol has invested US$45mn of the promised US$70mn to date, the source said.

About Business News Americas: Business News Americas is a multilingual news and business information service that covers the most important original stories in 11 different business sectors throughout Latin America everyday. Visit BNamericas to access our real-time news reports, 7-year archive, Fact File company database, and latest research reports.

Click here for a Free two week trial to our Latin America Oil & Gas information service.