PetroTal favoring Brazil export route for Peru oil

Canadian independent PetroTal is favoring an export route through Brazil for its Peruvian oil production in the face of renewed protests along Peru's northern crude pipeline.

Indigenous protesters have occupied a pumping station along the 100,000 b/d pipeline since early October, forcing state-owned PetroPeru to close it. In a 17 November escalation, protesters took over a second pumping station and burned vehicles.

The protests, which have erupted on and off for years, are directed not at the modest oil industry but at the government for allegedly failing to fulfill local economic development pledges.

PetroTal's top executive in Peru, Ronald Egusquiza, told Argus the company would have to halt production if the pipeline is not reopened soon.

"We are struggling to maintain production. If a solution is not reached in the coming weeks we will have to close the block," he said.

PetroTal's block 95 produced 12,767 b/d of 19.4°API crude from the Bretaña field in October, more than any other block in Peru.

PetroTal spudded two production wells in the first half of 2021 and in September drilled its lengthiest horizontal well. The company hopes to reach 20,000 b/d of production in 2022.

River delta

The company has three main export options, including the shortest outlet to Iquitos and the pipeline route under a contract with PetroPeru that runs through December 2022. The Brazil option, under which the crude is sold FOB at the field, has similar netbacks but with up to $3/bl upside depending on the cargo size, PetroTal said in a November earnings presentation. In mid-November, PetroTal shipped around 300,000 bl along the Amazon river through Brazil, the third cargo since late 2020 under a deal with Texas-based Novum Energy Trading.

Egusquiza said PetroTal is considering the river route as its primary export option if the crisis along the 1,100km (684mi) Peruvian pipeline drags on. The company has more than 200,000 bl of crude accumulated in tanks and barges.

"Exporting through Brazil has been a way to mitigate problems with the pipeline, but we are now looking at it as a stable option," he said.

In a recent proposal to the Peruvian government, PetroTal suggested the creation of an "indigenous trust fund" to better distribute oil taxes and royalties in the northern jungle.

"We need to resolve the historic demands of indigenous communities if there is going to be any kind of social peace," said Egusquiza.

Elsewhere in the northern jungle, block 67 operated by

Anglo-French independent Perenco produced around 2,000 b/d of oil in October. Blocks 8, operated by Argentina's Pluspetrol, and 192, formerly held by Canada's Frontera, have been shut in since early 2020.

Peru, better known for its natural gas production than for oil, produced about 44,000 b/d of crude in October, according to regulatory data, compared with 485,000 b/d in northern neighbor Ecuador.

By Lucien Chauvin