As Pluspetrol, the Argentine oil and gas company, prepares to hand back its 20-year concession of Block 192 in the north-east of the country (Loreto region) to the state, the issue of remedial payments to offset the effects of pollution looks like becoming a thorny one. The OEFA, the state agency charged with environmental surveillance, has pinpointed 92 sites where pollution and contamination are in evidence in this block, previously known as Block 1A/B. These divide up between the three river valleys – those of the Corrientes, the Pastaza and the Tigre – where production has taken place. The OEFA report makes clear that a number of oil installations are no longer in use, whilst others still in use fall far short of the proper standards expected.

The issue of the pollution caused by oil extraction in Block 192 has been the cause of bitter complaints by indigenous communities living in the area. This led to them taking direct action earlier this year by blocking the rivers concerned. The minister for energy and mines, Rosa María Ortiz, has made clear that it falls to Pluspetrol to pay for the costs of remediation and that Peru will pursue this in the courts if need be. However, at the same time, in an interview last week, she announced that the government would start paying for urgent remedial work from its own resources, arguing that the communities could not be expected to wait until the wheels of justice finally force the company to pay up. This, she said, could take years.

The concession to operate Block 192 expires in August. This is Peru’s main onshore source of crude oil, which is shipped to be refined both through Peru’s leaky North Peru Pipeline and by river barge. Pluspetrol’s weight in the hydrocarbons business – it is the main partner at Camisea – means that it has considerable power of negotiation. With the price of crude at around US$50 a barrel, it appears to be operating at a loss in Block 192.