Lima, Peru – The Peruvian government provided the necessary authorization last week for Petroperú to enter into a licensing agreement to carry out drilling operations in Block 192, the biggest continental oil operation in Perú and one with decades of accumulated social, environmental, and legal problems. This authorization allows Petroperú to seek a surety letter from international banks for the contract, and may signal that Petroperú will also seek new financing from international banks for Block 192 operations.
Amazon Watch’s Gisela Hurtado-Barboza issues the following statement: “Banks and asset managers should know that any investment in Petroperú represents a serious financial risk. In the case of Block 192, any investments also run serious climate, human rights, and reputational risks. These risks are even greater in the current moment, as Peru experiences its worst democratic crisis since 2000. The current government, which has lost all political legitimacy, is trying to take advantage of the political instability to speed up contested projects which have a history of extensive unremediated environmental impacts. The message is clear: the oil industry in Peru is a bad investment.”
Background
In September 2022, Amazon Watch published the report The Risks of Investing in Petroperú, assessing all the risks possible investors may have by investing in the state-owned oil company Petroperú. Banks and asset managers considering lending to Petroperú face serious financial risk stemming from years of mismanagement, unfulfilled promises, and a dense layer of social tensions coming from local contractors and Indigenous communities. Past oil companies have left Block 192 with severe unremediated environmental and climate impacts, international scrutiny leading to reputational damage, and more. Surrounding communities in Block 192 will continue to demand the implementation of a remediation plan with real investments to remediate the impacts of past oil activity. Remediation is a prerequisite for any operation within Block 192.
Amazon Watch shared this report with current financiers and investors, including BBVA, HSBC, Deutsche Bank, BNP Paribas, Santander, JPMorgan Chase, Bank of America, Goldman Sachs, Citibank, and asset management firms like Vanguard. BNP and Deutsche Bank publicly expressed concern about the findings of the report. Their full responses can be found on the report web page.
Background on Block 192
From 2000 to 2015, Block 192 was operated by Pluspetrol Norte. During this timeframe, there were more than 2,000 documented environmental harms in the block. Subsequently, the Canadian company Frontera Energy operated the block until 2021, when it pulled out due to force majeure as a result of community opposition, unremediated environmental impacts, and problems with the North Peruvian Pipeline. Any investment in this oil block risks failure, because those same tensions that provoked Frontera Energy to leave are still present and have not been resolved. A map of the environmental impacts of Block 192 is available on page 95 of Amazon Watch’s report.
