Peru to renegotiate natural gas contract with consortium led by Pluspetrol

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By Marcelo Rochabrun

LIMA, Sept. 27 (Reuters) – Two Peruvian ministers on Monday delivered an official letter to the Camisea consortium led by Pluspetrol, Peru’s largest natural gas player, asking the company to renegotiate its contract with the state in order to pay higher taxes.

The government announced the decision and a representative of the Camisea consortium confirmed to Reuters that the letter was delivered personally by the prime minister and the minister of energy and mines.

The letter follows a tweet https://www.reuters.com/world/americas/peru-pm-warns-gas-sector-pay-higher-taxes-or-face-nationalization-2021-09-26 from Premier Minister Guido Bellido said on Sunday that Camisea would have to pay higher taxes or would be nationalized.

Left-wing Peruvian President Pedro Castillo softened the tone later in the day, saying “any renegotiation” would respect existing laws.

The decision to raise taxes for an energy player like Camisea follows a previous plan to raise taxes on mining companies to fund social programs.

Castillo has in the past rejected suggestions that his government would engage in expropriations or nationalizations, but he did not directly contradict Bellido’s tweet.

“This is a terrible message that will scare away investments,” Pablo de la Flor, executive director of the National Mining, Petroleum and Energy Company, said in a statement. The De la Flor group represents the interests of companies in these sectors.

Castillo took office in July and his far-left presidency https://www.reuters.com/world/americas/peasant-roots-president-unlikely-rise-perus-pedro-castillo-2021-07-28 a scared the markets and investors. The Peruvian sol currency fell to a record low against the dollar on Monday, amid growing political instability. The renegotiation of the Camisea gas contract has long been pushed by the Peruvian left, including the Peru Free party currently in power.

The Camisea consortium is led by Argentinian Pluspetrol, with smaller stakes held by South Korean group SK, Hunt Oil and Repsol.

Camisea’s natural gas is liquefied by a separate consortium called Peru LNG, which includes Royal Dutch Shell, Japanese company Marubeni Corp, SK Group and Hunt Oil.

Earlier Monday, Peruvian Energy and Mines Minister Ivan Merino said in a presentation to Congress that he believed “the conditions were in place” to seek a renegotiation of the Camisea contract.

“Further negotiation is needed,” he said, adding that “we are not going to violate any standard or form.” (Report by Marcelo Rochabrun in Lima Editing by Matthew Lewis)


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