Peru's Congress boosts state energy firm in populist turn

LIMA, Sept 3 (Reuters) - Lawmakers in Peru reversed course
on state-owned Petroperu's role in upstream businesses and voted
on Thursday to remove a legal barrier that kept it from taking
control of the country's biggest oil block.
The populist turn comes as Petroperu supporters in the
Amazonian city of Iquitos continued protests against the
government's recent decision to grant Pacific Exploration and
Production Corp PRE.TO a two-year service contract to keep oil
flowing from block 192 after a 30-year concession failed to draw
any bids in an auction last month.
The bill's success, a week after a similar measure failed to
garner support, is the strongest sign yet of the tide of
nationalist and left-leaning posturing that tends to precede
presidential elections in Peru.
Peruvians will vote on a successor to President Ollanta
Humala in April 2016.
The bill that passed 71-10 in Peru's single-chamber Congress
late on Thursday does not in itself alter Pacific's contract.
Instead, it modifies a law that Humala had interpreted as
barring Petroperu from investing in upstream activities to make
an exception for block 192. That law also sailed through
Congress in 2013.
Humala is expected to veto the new measure - his energy
minister called the legislation "unconstitutional" - but
Congress could push it past him in a second vote.
Petroperu has not produced oil in more than 20 years and
mainly refines, stores and commercializes oil products.
Daily output from block 192 in the Amazonian region of
Loreto is now about 12,000 barrels, a level Pacific has said it
could ramp up.
But slumping crude prices and disputes with indigenous
communities have sapped interest in it, leaving Peru scrambling
to broker a last-minute deal with a new operator before the
expiration of the previous contract on Saturday.
Some lawmakers called for probes into potential wrongdoing
in how the energy regulator transferred operations of the block
to Pacific.
Humala has defended the contract, which he approved via
presidential decree on Saturday, as the best option for Peru
given weak oil prices and has said Petroperu was legally-bound
to focusing on its $3.5 billion refinery expansion.
Likely presidential candidate Keiko Fujimori, far ahead of
rivals in preliminary polls, was one of the first politicians to
say Humala should have awarded block 192 to Petroperu. Similar
statements from other politicians, including members of Humala's
party, followed.
Pacific declined to comment.