Peru's Energy Sector Rocked by Sabotages, Political Crises

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Researched by Amir Richani for Industrial Info Resources (Sugar Land, Texas)--Petroperu, the national energy company of Peru, has twice this month reported attacks to its infrastructure. On Sunday, Petroperu reported two cuts on its 1,106-kilometer (687-mile) Oleoducto Norperuano Pipeline (ONP), which transports oil from Peru's northern oil fields to the Pacific Ocean. This follows six cuts on the ONP in October.

Petroperu says it at work sealing the cuts, but these incidents point to deeper problems: The ONP has been closed for months due to similar attacks, hampering crude transport from the remote Amazonian fields to the nation's Bayovar export terminal in the Pacific. In addition, conflicts with northern communities and groups are not uncommon and sometimes lead to energy disruptions.

Such attacks have disincentivized many companies from investing in Peru's energy industry. For example, a couple of years ago, Canada's Frontera Energy left Peru's oil block 192, located in the northern region, after its contract ended. This field has been impacted by protests that led to production disruptions.

In addition, Peru's political instability is hindering long-term investments in its energy and mining sectors. In the last few days, President Pedro Castillo called on the Organization of American States (OAS) to visit Peru and conduct consultations and dialogue with different groups to temper political instability.

Castillo has faced two confidence votes and has reshuffled his cabinet several times since taking office in July 2021, driven by a constant backlash he faces from parliament and other Peruvian institutions. He now faces a constitutional demand which could end his mandate.

The OAS has positively responded to the Peru's call for support, with OAS Secretary General Luis Almagro tweeting: "We endorse the resolution of the Permanent Council (...) and we are available to provide support and cooperation, at the request of the Government of Peru, through efforts to promote dialogue and strengthen its democratic system of government."

However, the instability within Peru's government is not recent. Since 2016, Peru has had six different presidents, with many ousted through no-confidence votes over disputes with parliament. The conflicts between Peru's branches of government offer insights into the nation's hostile political environment.

Castillo's request to the OAS could delay any proposals to oust him from the government, yet it remains to be seen if this opportunity for dialogue will calm tensions.

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