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Filling The Gap: Tomorrow’s Most Popular Oil Trade

Filling The Gap: Tomorrow’s Most Popular Oil Trade

Following the delisting of DWTI…

Petroperu To Restart Disaster Oil Pipeline In 2017

Peru Pipeline

Petroperu will restart early next year the operation of its four-decades-old crude oil pipeline, which has caused several major leaks in the Amazon, after completing extensive repairs. The company also said it will seek support from Amazonian communities to help protect the pipeline from further vandalism.

It is vandalism that Petroperu blames for the spills—over 7,000 barrels just this year—along the 687-mile pipeline that supplies crude to Peru’s state-owned oil refining and transportation company’s refinery on the Pacific coast. Vandalism was one reason for the spills, according to the country’s environmental regulator, OEFA. Another was poor maintenance, which sparked massive protests from communities living in the Amazon jungle, which the pipeline crosses for most of its course to the Pacific.

The regulator fined Petroperu US$3.5 million for the latter, saying the company was guilty of “repeated and systematic failure of its environmental obligations.” In an interview with Reuters, Petroperu’s president, Augusto Baertl, said that making the company more environmentally responsible was a top priority, but added that it had a problem in this respect.

Although Petroperu is trying to get the communities on board, they do not see Petroperu as an ally, and are unwilling to cooperate. However, their support is necessary if Petroperu is to protect the pipeline from acts of vandalism, especially since, according to Baertl, some of these acts may well have been committed by members of these communities as an attempt to get a job in the cleanup operations.

Initially, the pipeline, which was shut down in February, was to remain so for a year, while Petroperu replaces the damaged parts it was ordered to replace by OEFA. Prior to the shutdown, the pipeline produced a relatively small amount of crude—15,000 bpd—but nevertheless, stopping the shipments has affected Peru’s economy, as it necessitated the suspension of production at two oilfields.

Besides the repairs of the pipeline, Petroperu’s plans under the new president also include a US$4.8-billion expansion of the Talara refinery, which is currently in construction. Baertl did not rule out venturing into production, but said for the time being that Petroperu had neither the workforce nor the funds to do so.

By Irina Slav for Oilprice.com

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