Protests force Pluspetrol to cut Peru oil output

By Dana Ford

LIMA (Reuters) - Pluspetrol has halted work at one of its oil blocks in Peru and state energy company Petroperu may shut its small refinery in the Amazon as protests over the control of resources drag on, the government said on Monday.

Argentina's Pluspetrol, which operates lots 8 and 1AB and produces roughly a fifth of Peru's total oil output, last week said it would gradually wind down output at lot 1AB.

But according to Peru's state energy agency, Pluspetrol cut production at lot 1AB to zero starting on May 20. Last month, the block produced a daily average of 16,099 barrels. Output at lot 8 appears more or less steady.

Both lots are located in northern Peru, where indigenous communities have blocked roads and waterways in a bid to get the government to revoke a series of investment rules they fear will lead to a massive private-sector land grab.

The demonstrations have forced Petroperu to shut its crude oil pipeline, which Pluspetrol uses to transport production from the northern jungle to the coast.

In a statement posted on its website, Petroperu said it may also need to stop operations at its refinery in the northern city of Iquitos, which has a daily processing capacity of around 10,000 barrels.

Peru, which has auctioned off mining and energy concessions throughout most of the country, has drawn fierce criticism from environmental and human rights groups that say development threatens the environment and risks exposing remote tribes to new and deadly diseases.

The government is encouraging investment as it tries to transform itself from a net oil importer into a net exporter.