Watching The World: Hunt Oil's Peru problems

Nov. 2, 2009
Environmental concerns are growing around the world, putting increased pressure on the oil and gas industry. Consider Hunt Oil's problems in Peru.

Environmental concerns are growing around the world, putting increased pressure on the oil and gas industry. Consider Hunt Oil's problems in Peru.

Peruvian tribes want Hunt to abandon its exploration program on Block 76. To emphasize their point, the tribes have threatened to forcibly remove oil workers from a camp near the town of Salvacion in the Madre de Dios region of southern Peru.

After their threat, tribal reps last week said they would hold talks with Hunt officials. "We have to wait for the result of this meeting before we know about the removal," said Maria Gonzalez of the Fenamad indigenous rights group.

The tribes insist that a government concession to Hunt and Repsol to look for oil in Block 76 broke the law. They say the concession strays into the Amarakaeri Communal Reserve, protected ancestral lands that could hold billions of dollars of oil deposits.

Government view

For its part, the government of President Alan Garcia insists that the tribes control only surface rights of the reserve, while the government can freely lease subsoil mineral rights to international oil companies.

In 2006, Hunt signed a License Contract for Block 76, covering 3.5 million acres in the provinces of Manu and Tambopata along the Camisea gas trend.

Hunt, along with Repsol, recently completed the first 2.5-year period of the Block 76 contract, which entailed geology and geophysical studies, an environmental impact assessment, field study and seismic processing. The second period of the partners' contract commenced in the first quarter of 2009.

Hunt also has its supporters in the region. Marco Pastor Rozas of Sernanp, the government agency that oversees protected lands, has said Hunt's plan meets environmental guidelines and that it enjoys the support of at least four of eight communities near the Amarakaeri reserve.

But four of eight does not seem to be quite enough support for Hunt, which – in addition to protests from the Amarakaeri reserve – also faced criticism from two other indigenous associations in the area, Fenamad and Coharyima.

Tribal plans

Together with the Amarakeri, those groups signed a letter this month saying they would "take actions to stop seismic work in the interior of the reserve and even put our lives on the line so that our rights are respected."

According to Fenamad, maps of Hunt's seismic exploration plan include putting explosives or other equipment that causes powerful vibrations all along a big circle that sits within the reserve. They say the process will cause deforestation in a headwaters area of the Amazon basin.

Analyst BMI gives an apt summary of the problem: "Seeking to transform Peru into a net hydrocarbon exporter…[President] Garcia and his predecessor Alejandro Toledo have shown short-sightedness in leasing out large sections of the country to foreign investors without solving the underlying social conflicts."

Unfortunately, it seems that Hunt is paying a hefty price for that short-sightedness.

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