LIMA (Reuters) - Peru will put five offshore oil contracts on hold until it can clear up questions over why the country’s disgraced former president awarded them to Tullow Oil before resigning, the new energy and mines minister said on Wednesday.
The comptroller’s office and lawmakers opened probes into the contracts after learning former president Pedro Pablo Kuczynski had signed a decree approving them while his government imploded in a graft scandal last month.
The new government of President Martin Vizcarra said the contracts must be shelved in the meantime.
“The contracts cannot be signed until it’s clear they fulfilled all legal requirements and that is in the hands of the comptroller’s office,” Energy and Mines Minister Francisco Ismodes told a press conference.
“They also cannot be signed without having first developed a process to clear up doubts from residents, fishermen and authorities,” he added.
Tullow could not immediately be reached outside of regular working hours. It said last week that the terms and conditions of its contracts and the process for approving them were similar to those Peru signed with other oil companies last year.
It was unclear if Peru could block the concessions without running the risk of a lawsuit.
Critics say the contracts should have been awarded in a public auction following consultations with environmental authorities, fishermen and coastal residents. They also say the government should have set a higher royalty rate.
Perupetro, Peru’s state oil investment agency, has said the contracts were the fruit of months of negotiations and well within the laws of a country where open bidding rounds have been repeatedly canceled due to lack of interest.
The contracts grant Tullow the right to explore and drill for oil off Peru’s northern coast, including biodiverse swathes of the Pacific where whales and dolphins breed, according to environmentalists.
The company, which has been reviving its search for new resources, planned an initial investment of more than $200 million, according to Perupetro.
Peru is a relatively small oil producer in a region where major players like Mexico, Brazil have cut regulations to promote investments in the sector.
Reporting By Teresa Cespdes, Writing By Mitra Taj; Editing by Sunil Nair