Peru to restart drilling, oil production at Amazon oil field

(Bloomberg) – Petroleos del Peru SA is moving forward with plans to resume drilling in the Amazon rainforest at what was once the nation’s largest and leakiest oil field.

The state-owned firm known as Petroperu said that its board authorized the signing of a contract to take control of Lot 192 in a remote area near Ecuador. A person familiar with the matter said the contract will be signed Wednesday, asking not to be identified ahead of an official announcement.

It’s part of a plan to reestablish Petroperu as a producer after its refining and drilling arms were mostly privatized in the 1990s. While much of the world focuses on green energy investments, Peru has signaled it still sees oil as key. But most of its reserves are in a biome that’s home to isolated indigenous groups and whose preservation is considered crucial to fighting climate change.

Petroperu has said it could produce 12,000 bpd at Lot 192, compared with Peru’s national output of about 40,000 bpd. The oil would be transported to the company’s new Talara refinery via a pipeline that’s also had recurrent spills.

Peruvian President Dina Boluarte recently traveled to Talara to tout the new refinery, which is behind schedule and over budget at $5.3 billion so far. Boluarte’s predecessor Pedro Castillo was eager to bring Petroperu back into the oil production business at a time of rising fuel prices.

Petroperu could start producing at Lot 192 in a year, the person said. It’s been dormant since early 2020, when it was contracted to Frontera Energy Corp. According to data compiled by Oxfam, 189 spills were reported there between 2000 and 2019.

Petroperu also operates a small field near the coast.