Congress overrules executive on Block 192

26 October 2015

On 22 October, Congress voted by sufficient a margin to overrule the presidential veto on a previous bill that would have ruled Petroperú out of the running in determining which company will take over from Pluspetrol in exploiting Block 192, Peru’s main source of crude. 74 members of Congress voted in favour, ten against and four abstained.

The issue has been an emotive one in Loreto and its capital Iquitos. As voting took place in Congress, large numbers marched through the streets of Iquitos to demand that the state company be awarded the concession. Indigenous groups in the region have also lent their support, although for them the main issue is who will take responsibility for clearing up the contamination caused by 40 years of oil extraction on their ancestral lands.

The issue has also been divisive at the national level. For years, the Ministry of Economy and Finance (MEF), egged on by private sector lobbyists and conservative politicians, has sought to restrict the activities of this once emblematic state company. According to the MEF, Petroperú lacked the capacity to manage an operation the scale of Block 192.

Until recently this was the position too of the centre-right bloc in Congress, but two months ago the pro-Fujimori Fuerza Popular (the largest single party in Congress) switched its position. This was widely seen as a tactical ploy to undermine the government and to curry favour with voters in Loreto in advance of next April’s presidential elections.

It now seems that the Canadian company Pacific Stratus, with whom the government had signed a contract, will assume control for two years before relinquishing it in August 2017 to Petroperú. Petroperú has said it will appoint directors to oversee the project in the meantime. There are moves ahead to declare the contract with Pacific Stratus invalid on the basis of alleged irregularities.

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