Petróleos del Perú – Petroperú S.A. is a state-owned oil company that has been operating in the midstream and downstream business. The North Peruvian Pipeline – administered by Petroperú – transports crude oil from the Peruvian Amazon to the coast. Petroperú also refines crude oil in three refineries. The principal refinery Talara is finalizing a modernization project, which plunged Petroperú into debt. Recently, Petroperú returned to the upstream business, operating Block I, located on the North Peruvian coast, and the company is seeking to operate other blocks, including Block 64, located in the Peruvian Amazon, which faces community opposition.
This risk assessment describes the political, social, financial, environmental, and legal risks associated with investing in Petroperú. It also compiles the perspective of some communities that could be affected by the threat of oil operations by Petroperú, in particular, the Achuar People of the Pastaza River and the Autonomous Territorial Government of the Wampis Nation. As will be further explained in detail below, Petroperú is known to be a poorly managed company that has seen significant community opposition and social conflicts due to the large environmental liabilities its oil operations have caused. Those factors have put the state oil company in a financial crisis that puts any investor at risk by investing in the company.
Banks and asset managers named in the report received an advanced copy and we asked them to make a public comment. BNP Paribas provided the following comments to Amazon Watch’s risk assessment of Petroperú:
“The issues raised in the report are concerning and, although we cannot comment on our relations with our clients beyond what is already public, BNP Paribas is conscious of the importance of protecting the Amazon basin and has been acting as a leader with breakthrough policies on Brazilian Amazon and Cerrado regions with regard to agriculture, as well as in the oil and gas.
“In May 2022, the Group decided to strengthen the requirements applicable to its clients’ projects in the Amazon region and committed to exclude all financing and investment in new oil and gas projects located in IUCN I to IV or RAMSAR zones or in the Amazon Sacred Headwaters.
“We are currently updating our oil and gas sector policy to formally integrate these new criteria for financing and investments. The updated policy will be released soon and will from now on apply to new projects.
More specifically, within the framework of the sectoral policies, the group carries annual assessments of its clients. In line with our commitment to protecting the Amazon, reinforced due diligence will be therefore be deployed in application of the new policy, to all financing and investments projects in oil and gas. This may lead to placing companies under monitoring or eventually deciding to end the relationship if they fail to comply with the Group’s standards and commitments.
“Also, as always, the Group remains particularly vigilant to the respect of the Free, Prior and Informed Consent (FPIC) of indigenous and local communities in line with the 4th version of the Equator Principles, and engages in regular dialogue with its clients to ensure that the FPIC of the local communities impacted by their projects is obtained.”
German Bank Deutsche Bank – representatives of which met with Indigenous leaders from the Achuar del Pastaza and Wampis Nations to talk about these issues – responded, “As you know we don’t comment any existing or not-existing client relationships. However we always appreciate that you contact us and keep us informed.”
