Peru state energy firm saw more risk, less profit in large oil block

LIMA, Aug 21 (Reuters) - Peru's state-owned energy company
Petroperu opted not to take a stake in the country's biggest oil
block as expected because the short-term contract signed this
week would mean more risk and less profit, the firm said Friday.
Petroperu said in June that it would likely exercise its
option to take a stake of up to 25 percent in block 192 as
allowed under a law designed to strengthen the company, which
has not produced oil in more than 20 years.
But an auction for a 30-year concession on the block failed
to draw any bids earlier this month amid slumping oil prices and
thorny government talks with communities, prompting Peru to draw
up a contract through direct talks with interested companies.
Canada's Pacific Exploration and Production Corp PRE.TO
won the right to operate the block in a two-year service
contract earlier on Friday.
Petroperu President German Velasquez said the contract's
terms were not appealing.
"It left some things open, for example, who would assume
environmental liabilities," Velasquez said in an interview on
Friday.
"And you're not going to be able to take advantage of the
generation of wealth as much as in a long-term contract," he
added.
Petroperu has the option to take a minority stake in oil
contracts that Peru signs with private companies.
Peru's agreement with Pacific Exploration and Production
Corp, previously called Pacific Rubiales Energy Corp , comes just
eight days before current operator Pluspetrol's contract
expires.
Velasquez said Petroperu still aims to return to upstream
activities and would be interested in a longer-term contract for
block 192 in the future.
He also said he hopes the government will soon approve its
plans to tap oil block 64. The approval has been pending since
October of last year.
Petroperu would control a 75 percent stake in block 64,
which holds some 55 million barrels of proven and probable light
crude reserves. GeoPark Limited GPRK.N , would own 25 percent.