Peru moves to renegotiate natural gas contract with Pluspetrol-led consortium

Two Peruvian ministers delivered a formal letter to the Pluspetrol-led Camisea consortium, the largest natural gas player in Peru, requesting that the company renegotiate its contract with the state in order to pay higher taxes.

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

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 by Prime Minister Guido Bellido on Sunday saying Camisea should pay higher taxes or else will be nationalized.

Leftist Peruvian President Pedro Castillo softened the tone later in the day, saying "any renegotiation" would respect current laws.

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

Castillo in the past has rejected suggestions that his government will engage in expropriations or nationalizations, but he has not directly contradicted Bellido's tweet.

"This is a terrible message that will scare away investments," Pablo de la Flor, executive director of the National Society of Mining, Oil and Energy, said in a statement. De la Flor's group represents the interests of corporations in those sectors.

Castillo assumed 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 has spooked markets and investors. Peru's sol currency fell to a record low on Monday against the dollar, amid the increasing political instability. Renegotiating the Camisea gas contract has long been pushed by Peru's left, including the Peru Libre party that is currently in power.

The Camisea consortium is led by Argentina's Pluspetrol , with smaller stakes held by South Korea's SK Group , Hunt Oil and Repsol.

The natural gas from Camisea is liquefied by a separate consortium called Peru LNG, which includes Royal Dutch Shell, Japan's Marubeni Corp, SK Group and Hunt Oil.

Earlier on Monday, Peru's energy and mines minister, Ivan Merino, said in a presentation to Congress that he thought "conditions were in place" to look for a renegotiation of the Camisea contract

"A new negotiation is necessary," he said, adding that "we are not going to violate any norm or form." (Reporting by Marcelo Rochabrun in Lima Editing by Matthew Lewis)

• Most Read
• Most Commented