By Mitra Taj
LIMA (Reuters) – Pedro Pablo Kuczynski’s critics call it his last act.
Hours before the former Wall Street banker resigned Peru’s presidency in scandal last month, Kuczynski signed five oil contracts granting London-based Tullow Oil exploration and drilling rights off Peru’s northern coast.
Lawmakers have vowed to investigate and try to repeal the contracts. They say there should have been a public auction, an environmental study and consultations with fishermen, biologists and coastal residents about sites that lie in an important fisheries area rich in biodiversity.
Critics are unconvinced by Peru’s oil promoting agency, Perupetro, which said the contracts followed months of negotiations and should be celebrated for the $200 million investment they will bring to a country where bidding rounds are often canceled due to lack of interest.
“It’s not normal for a president, just before resigning, to sign five decrees giving away our resources,” said Congresswoman Karla Schaefer with the conservative party Popular Force. “Given Mr. Kuczynski’s background, it raises a lot of questions.”
Kuczynski’s less than two years in office featured clashes with Popular Force lawmakers who depicted him as an unscrupulous lobbyist. He resigned after being implicated in an alleged vote-buying scheme to prevent possible impeachment over payments his consulting firm received from Odebrecht, a company at the center of a massive graft scandal.
Kuczynski denies wrongdoing and has promised to cooperate with public prosecutors investigating him. Kuczynski’s lawyer did not respond to requests for comment about Tullow Oil.
The company has been cautiously reviving its search for new oil and gas resources after emerging from one of the longest downturns in the sector’s history with a $3.5 billion debt pile.
For foreign investors in one of Latin America’s most stable economies, the latest controversy brought reminders of a how a more than yearlong graft scandal involving Odebrecht has heightened scrutiny of government contracts and fueled political feuds in Peru.
Tullow said it started direct negotiations with Perupetro as allowed by Peruvian law in November. “Both the terms and conditions of our contracts and the process for approving them are similar to those signed with other oil companies in 2017,” it said in a statement.
But leftist lawmaker Hernando Cevallos said Peru’s new president, Martin Vizcarra, should rescind the contracts. “This area is the source of 40 percent of our fishing,” Cevallos said.
Vizcarra’s office declined to comment.
Yuri Hooker, a marine biologist who researches undersea life in Peru, said three of Tullow’s oil concessions contain high levels of biodiversity. “This whole area is one of the most important breeding places in the Pacific for whales and dolphins, as well as fish and invertebrate species on the verge of extinction,” said Hooker.
The former head of Perupetro, Francisco Garcia, said Tullow will have to secure environmental approvals before drilling, and denied anything irregular about the contracts. A minor oil producer, Peru has struggled to lure investments to its prospects as bigger players in the region such as Mexico have grown more competitive by cutting red tape.
“Now all we’re doing is driving companies away,” Garcia said, adding that he resigned last month because most of his time was spent responding to lawmakers.
(Reporting by Mitra Taj; Editing by David Gregorio)
