Peru
Press Release

SNMPE: Peruvian hydrocarbon sector faces one of the most serious crises in its history

Bnamericas Published: Wednesday, May 20, 2020

This SNMPE release was published using machine translation.

The hydrocarbon industry in Peru is experiencing one of the most drastic crises in its history, since the collapse in the price of a barrel of oil and the demand for fuels, practically makes the continuity of hydrocarbon exploration and exploitation operations in the national territory unfeasible. .

This was stated by Pablo de la Flor, executive director of the National Society of Mining, Oil and Energy (SNMPE), explaining that the dramatic situation facing the national hydrocarbon sector will lead to many batches minimizing their production and, in some cases , until the closure of the oil fields is reached.

"There is a risk that many contractors choose to return lots to PeruPetro SA, which would entail the dismissal of personnel (direct and indirect labor) and the loss of income for the State (royalties and taxes, of which pays the canon and over-canon to the regions), as well as the increased costs of security, monitoring and maintenance of the facilities that the State must assume until the lots are handed over to new contractors, "he said.

In this context, he stressed, it is necessary for the government to adopt urgent and extraordinary measures to avoid the collapse of the Peruvian hydrocarbon industry.

“We have 15 oil lots and the Norperuano pipeline in a situation of force majeure. All this is a reflection of the crisis that this important productive sector of the national economy is experiencing ”, he quoted.

De la Flor, maintained that the Executive Power must work on two fronts, the first of them, through extraordinary and urgent measures so that, in the framework of the national emergency, exploration and exploitation contractors do not reduce or close their operations. .

In this regard, he specified that the payment of royalties during the emergency can be deferred, so that after that period, the contractors proceed to reinstate the amounts of the royalties owed in a fractional manner. This formula could also be extended to beneficiaries of service contracts, he added.

Likewise, he said that, in a second work front, the government should encourage the measures that are necessary to reactivate the activities of exploration and exploitation of hydrocarbons, such as, for example, approving a methodology for calculating royalties and remuneration that allows to recover competitiveness. of this industry at the regional level.

He stated that the viability of the contracts must be ensured, for which the balance point of price and volume of hydrocarbon production must be analyzed on a case-by-case basis; as well as the flexibility of the schedule of fulfillment of obligations that imply the investments programmed for this year.

Another highly relevant issue, he said, is to continue promoting the process of massification of natural gas, which will allow the various regions of Peru to access an economic, efficient and environmentally friendly hydrocarbon.

However, he noted, currently the natural gas distribution concessions are in a rather difficult situation due to the drastic contraction in demand and the high delinquency rate registered due to the lack of payment by customers given the current period of emergency that the country is going through. "These events have exacerbated the situation of companies such as Naturgy Peru, which recently announced that it will take bankruptcy proceedings in Indecopi," he said.

Finally, the SNMPE representative made a call to government authorities to support massification with effective measures that allow natural gas distributors to operate under adequate conditions.

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