LIMA, Feb 27 (Reuters) - State-owned energy company Petroperu will start repairing its ruptured pipeline in the Peruvian Amazon (NASDAQ:AMZN) on Wednesday, after the government struck a deal with an indigenous community that had blocked such work for nearly three months, the government said.
Repairing the pipeline would allow Canadian oil junior Frontera Energy Corp FEC.TO to resume production of some 12,000 barrels of oil per day in a month, the company has said.
The pipeline normally transports crude to Petroperu's refinery on the Pacific coast from oil fields in the Amazon, including Frontera Energy's Block 192. But it has been offline since November, when Petroperu said members of the indigenous community of Mayuriaga ruptured it in a dispute over local elections and refused to let it enter a remote area for repairs.
The government announced late on Tuesday that it reached an agreement with Mayuriaga that will deliver a series of basic public services to the community in exchange for allowing repairs on the pipeline.
Representatives of Mayuriaga could not immediately be reached for comment.
A spokesman for Petroperu said early on Wednesday that teams of its workers were on their way to begin repairs.
The impasse between the government and the community had halted Frontera Energy's output from Block 192 and cost the company $10 million. The company called for the government to solve the dispute earlier this month, saying it was rethinking its interest in investing in Peru in the long-term. could not immediately be reached for comment on Wednesday. The company has said its engineers estimated repairing the pipeline would take about a day, and that its operations at Block 192 would fully resume within an month.
Peru, a major minerals exporter and a relatively small oil producer, is rife with social conflicts, especially in provinces where extractive companies operate alongside poor communities. Remote villages often seize control of roads and infrastructure to demand public services or compensation for use of local land.
The government of President Martin Vizcarra said the deal with Mayuriaga includes plans to build an elementary school and a telecommunications antenna. The community will also be included in the government's rural electrification program by the end of the year, it added.