Peru Suspends Oil Contracts, Fires Official In Scandal

LIMA (Dow Jones Newswires), October 6, 2008

Peru's government on Monday suspended a number of recently awarded gas and oil concessions, fired one high-level government official and accepted the resignation of another official due to a widening scandal tied to the concessions.

The government suspended the contracts that gave exploration and development concessions for oil and gas lots to a partnership made up of state-owned Petroperu SA and junior Norwegian company Discover Petroleum.

In September, state oil and gas licensing agency Perupetro awarded concessions to Petroperu and to three-year-old Discover Petroleum to jointly explore in four offshore blocks and a potential gas field in Peru's jungle.

The government auctioned off 17 new oil and gas blocks in September, part of its push to explore for new hydrocarbon resources.

Late Sunday, a television news program broadcast recordings of conversations between Perupetro director Alberto Quimper and another person negotiating under-the-table payments for the awarding of the contracts.

On Monday the government removed Quimper from the board of Perupetro.

"We consider it very serious that a public bureaucrat has betrayed the confidence of the state and the nation by meeting with lobbyists to share out commissions," President Alan Garcia said at a press conference late Sunday.

On Monday the government also accepted the resignation of the president of Petroperu SA, Cesar Gutierrez.

In a radio interview Monday, Gutierrez said Petroperu went into a partnership with a company, Norway's Discover, that had qualified and that had met the legal requirements to bid on lots that were awarded.

Gutierrez's name wasn't mentioned by the participants who took part in the conversations over the payments.

Energy and Mines Minister Juan Valdivia also submitted his resignation to Garcia, although Valdivia said Monday that that Garcia hadn't made a decision.

"I wasn't involved directly or indirectly in the awarding of these concessions," Valdivia said in a broadcast interview Monday.

The awarding of the contracts by Perupetro to Petroperu and Discover had been questioned earlier by those who said that Discover didn't appear to have the financial backing to take on extensive offshore drilling.

On Monday the president of Perupetro, Daniel Saba, said in a broadcast interview that "neither in this case nor in other cases have there been any outside influences."

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