Can Peru restart its Amazon oil industry? Pollution and local opposition are a concern

Wilmer Macusi, a Peruvian living in northern Amazon, sat atop an old rusty pipe that cut through the jungle and tossed a branch into the stagnant pool of water around it.

Macusi, an Indigenous Urarina leader of 25 years, pointed to the place where an oil spill took place in early 2023. "But even if you change the water, the oil will still come out." As plastic barriers intended to contain the spill dropped into the water, black droplets bubbled up to the surface. The pipeline connects a nearby oilfield (Block 8) to the North Peruvian Pipeline, which is owned by the government. Santa Rosa, Macusi's locality, is just a few minutes away. According to data from the government, Peru's northern Amazon contains hundreds of millions barrels of crude oil. However, indigenous groups claim that oil extraction in the last half century has brought pollution and not progress. They are against a new wave of development.

In the 1980s, this region produced more than half of Peru’s oil. However, environmental liabilities and local opposition lowered production to 40,000 barrels per day. In 2020, key blocks became dormant.

Petroperu, the state-owned oil company, is once again focusing on the modest reserves of this region. The company spent $6.5 billion to upgrade its Talara refinery, which now produces 95,000 bpd of high-grade fuels. Petroperu, heavily indebted and with a CCC+ junk rating from the ratings agency Fitch wants to revive Amazon oil production to supply Talara.

Petroperu, the state-owned firm, estimated that last month proven and probable reserves were valued at $20.9 billion. This could generate $3.1 billion of tax revenue for local governments.

The amount of oil involved is small but the plans have caused tensions due to past spills. This has fueled Indigenous opposition as Brazil, Ecuador, and Guyana try to expand their Amazon oil frontiers.

The frustration about forest protection and climate action boiled over during the

Climate summit COP30

This week, dozens of Indigenous demonstrators forced their way in and clashed violently with security guards.

Petroperu also plans to import oil into the refinery through a 1,100 km ONP link to Ecuador. Ecuador is aiming to increase production in the Amazon region of its country as part a $47 Billion oil expansion plan. The ONP was hailed as a marvel of engineering when it opened in the 1970s. However, since then, it has become a lightning-rod for leaks, protests, and sabotage. Both indigenous groups are fighting the pipeline connection.

The government is considering options to best run the pipeline. These include a joint venture and outsourcing its management.

OBSTACLES TO REVIVAL

Petroperu has failed to find an international partner for its largest oilfield Block 192. This field produced over 100,000 bpd during its peak, but was recently the subject of Indigenous protests calling for remediation due to damage caused to the soil, forest and waterways.

Petroperu’s former chairman Alejandro Narvaez was dismissed last month. He estimated Block 192 production at least 20,000 bpd and that Amazon's overall production could reach 100,000 bpd.

Upland Oil & Gas, a domestic company, was selected by the state oil firm to operate the block. However, Peru's state regulator of oil disqualified Upland in the last month because it had not demonstrated financial capability. Upland has requested a review of the decision. Petroperu partnered up with Upland in order to restart production at Block 8, a smaller block that produced 5,000 barrels per day last month. Upland CEO Jorge Rivera is the son of Peru's first oil prospector. He said that Upland had offered Indigenous communities funding, training and jobs.

He said, "We have dedicated ourselves to understand the complexities of operating these fields." Rivera made a visit to Santa Rosa, California in March. He gave a Starlink terminal as a gift and requested a report about the needs of the community.

Although the community was primarily concerned with the cleanup of a nearby spill, questions still remain about who is responsible.

Although Upland is responsible for the 108 km of pipeline that connects Block 8 to the ONP and runs through it, its contract exempts them from liability for pollution in the past.

Pluspetrol Norte was the previous operator. It is an Argentinean subsidiary that was fined a number of times before filing for liquidation in late 2020 and leaving the area.

Eight Indigenous federations, as well as non-governmental organisations, filed a complaint with the Dutch National Contact Point of the OECD, a mechanism for implementing OECD guidelines to businesses. The Dutch National Contact Point concluded in September, that Pluspetrol violated Indigenous community rights in Peru's Amazon, and urged Pluspetrol to remedy the damage to the environment.

Pluspetrol responded by saying that it had already complied with the environmental and human right regulations. It also said the NCP statement lacked merit because it did not reflect the "breadth, complexity and extent of evidence presented and actions taken by the Company."

Onp Spills

Scientists have been studying the effects of oil fields on wildlife and Indigenous populations for decades. They've found that there are high levels of mercury, lead, and arsenic. Block 192 cleanup costs are estimated at $1.5 billion.

OEFA recorded over 560 environmental violations including oil spills or other incidents from the ONP and other oil infrastructure blocks in Blocks 192 & 8 between 2011 and September 2025.

Petroperu said that any damage was "temporary" and "reversible". It blamed the local communities for "economic, rural and domestic activities" which were not specified.

The Peruvian prosecutor's office announced in late 2023 that they had dismantled a network consisting of local Indigenous leaders, businessmen and an employee from Petroperu who, according to the prosecutor, were orchestrating oil spills for lucrative cleanup contracts.

Narvaez stated in an interview before his dismissal that Petroperu prioritized the cleanup of spills under regulator supervision. Fidel Moreno, Petroperu Board Vice President, was appointed to replace Narvaez by the government of Peru's interim president Jose Jeri who assumed power last month. The government also announced that it would soon replace Petroperu’s entire board. Moreno declined to respond to an interview request. Macusi stated that communities have not yet received the fund Upland promised to provide 2.5% from oil sales. Meetings with Perupetro to discuss funding community projects were delayed. In 2022, after an oil spillage from the Block 8 Connector pipeline, Urarina Communities held a strike. They took over oil fields, oil facilities and blocked a river in order to demand better state response. Macusi says that communities are prepared to act again after Macusi hauled buckets of oil spilled as a teenager.

He said that if the benefits promised did not arrive soon, he would take action.

(source: Reuters)