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Canadian Frontera Energy said it had suspended production at the largest oil field in Peru after protesters against oil production in the region severed the pipeline that carries the crude from the field to a Petroperu operated refinery.
The company said in a statement that the field would stop producing until the authorities and the protesters resolve their dispute and the latter allow the access of repair crews to the location of the cut.
Reuters reports that Petroperu had warned last Friday that Frontera Energy might have to suspend production at Block 192 because of the shutdown of the Norperuano pipeline. The state energy company estimated daily losses from the shutdown at US$200,000. Block 192 produces an average of 8,950 barrels daily.
What’s more, Petroperu expects an oil spill of as much as 8,000 barrels. Reuters recalls that since 2016, attacks on the pipeline, to the tune of 15, had caused spills of 20,000 barrels in total. Another 5,600 barrels have leaked from the 1,100-km pipeline because of corrosion.
Last year, indigenous Amazonian communities temporarily shut down 50 oil wells in protest against government negotiations with Frontera for further oil development in the region without prior consultation with the communities as per a 2011 law.
Peru is a small oil producer, pumping about 50,000 bpd as of April this year, but it has ambitions to grow its output. To this end, the state oil company has been raising financing through bonds. For next year, Petroperu plans to raise some US$600 million in fresh debt to upgrade the country’s biggest refinery.
Block 192 contains an estimated 100 million barrels of crude. Frontera Energy operates it on a temporary basis, with its contract expiring in March next year. The company said the protesters had cut the pipeline around 200 km from the field and it expected operations to restart quickly after the repairs of the pipeline were done.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.