Peru eyes doubling oil and gas investment

Peru hopes to aggressively pursue oil and gas investment in the next five years by encouraging exploratory drilling and creating a stable environment for investors, the new oil agency head said on Wednesday.
"Investments of between $8 billion and $10 billion are already expected for the next five years. We are optimistic that this could very well be doubled," Aurelio Ochoa, president of state-run Perupetro said in an interview.

Ochoa, a geologist who previously worked as a private consultant, said Peru is one of the few countries classified as "semi-explored" and holds a lot of oil yet to be discovered.
He said an auction for exploration rights to new oil blocks could be held this year. Big multinational firms would come in time, he said, but the government could do more to simplify the process for project approvals in order to attract them.
"We have to first prepare the fertile ground for them and they will come sooner or later, obviously we hope sooner," he said. "We have to create a virtuous cycle rather than the delays we've seen on important sites."
When former President Alan Garcia auctioned off large blocks of the Amazon to oil firms, local communities accused him of ignoring their interests and protested -- sometimes violently. More than 30 people died in a clash in the town of Bagua in 2009, prompting Garcia to revoke a series of decrees designed to facilitate energy investments.
Newly sworn in President Ollanta Humala, a leftist, was supported by some of those same protesters in the June 5 election. But he has recently tried to court investors by naming moderates to his cabinet.
Humala says widespread social unrest in the Amazon can be quelled by better distributing income from Peru's oil wells and mines and by passing a law Garcia vetoed that requires firms to gain acceptance from local communities. The law would put Peru in compliance with a United Nations treaty it already signed.
Ochoa said Perupetro is preparing the companies it works with for approval of the consultation law and is already conversing with rural communities.
"This administration is not going to wait for conflicts to burst, we will not be firemen putting out fires, what we are going to do is prevent them," he said.
Activists cried foul when concessions for four oil blocks were approved on July 27, Garcia's last day in office, because they said proper consultation had not taken place. Ochoa said those concessions would not be revised.
"Legal stability must be respected for continuity," he said.
Perupetro will also inherit ongoing negotiations with Camisea, the international consortium that controls Peru's largest natural gas field, over export agreements and royalties.
"They have requested a protocol visit, we've had a meeting," Ochoa said of the consortium led by Argentina's Pluspetrol. "We cannot give a timeline, but we do have guidelines that will be met."