beyondbrics

Peru’s return to gas-exporting status is turning into an almighty headache for president Alan García, with protests turning ugly this week and threatening power supplies for a third of the country.

Nineteen people were injured and 25 arrested after protesters blocked roads, burned a workers camp and took two gas workers hostage in Convención province, south of Lima.

Yesterday, 1,000 more took their protest to the centre of Cusco, the jumping-off point for tourists heading for Machu Picchu, the crown jewel of the Andean nation’s tourism offering.

The protesters argue the country does not have sufficient natural gas for domestic needs, let alone export, and while the government argues the contrary, two recent opinion polls show public support is with the protesters. Pollsters by CPI and Datum found 68 per cent and 60 per cent of those polled were strongly opposed to natural gas exports.

This is bad news for the Camisea consortium, which includes Repsol of Spain, Hunt Oil of the US, Pluspetrol of Argentina, SK Energy of South Korea and Marubeni of Japan.

President García, in his last Independence Day address to the nation, listed renegotiation of the contracts as a priority, and the hydrocarbons promotions agency is expected to begin talks this month aimed at ensuring royalties for exported gas are never below the amount of royalties for domestic use.

Javier Velásquez, prime minister, has accused fragments of the Shining Path guerrillas and left-wing parties of orchestrating the protests in the lead-up to congressional and presidential elections in October and April respectively.

But a high rate of social protest, mostly linked to extractive industries, is a feature of doing business in Peru. According to ombudswoman Beatriz Merino, there were 250 conflicts in June, down from 255 in May.

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Peru sparks controversy as it moves from gas importer to exporter, beyondbrics