After Over 5 Years of Dialogue In Oil Block 192, Distrust Worsens Between Indigenous Peoples and The State
Photos by Bryan Parras, Liana Lopez, Clement Guerra and Sophie Pinchetti
Text by Sarah Kerremans, Executive Director of The Chaikuni Institute and José Fachín, indigenous advisor to the Five River Basins
Oil block 192, Peru’s most important oil block, extends over different rivers and affects the territories of different indigenous peoples such as the Achuar, Kichwa, Kandoshi, Urarinas, Kukumas. Besides the cultural wealth, this zone hosts a fabulous biodiversity. Oil company activity in this zone started in the Seventies. After over four decades of oil company activity, indigenous peoples who live in the direct and indirect surroundings of oil block 192 (formerly known as oil block 1AB) have been organizing for over a decade to make their voices heard have their demands met.
The last protest mobilization against the oil contamination began on September 1st, 2016. The community of Saramurillo on the Marañón river had a central role in these protests. During the protest, different indigenous peoples from five places in the Amazon basin (some of them living in oil block 192) were united. Together, they managed to strongly defend their territory for 117 days.
Neither the urban society from Loreto, nor the national civil society in general has given these indigenous peoples and the way they defend their territory the support or recognition they deserve. To say that what happened in that part of the Loreto region is terrifying and without any doubt criminal would not fully cover the truth. Indigenous grandfathers, fathers and mothers, as well as ‘city people’ (inhabitants of Iquitos, Lima and Andinos included) and others who worked in oil block 192 can testify as to what what occurred and is still happening in that remote zone.
The large exposure to toxic materials and the disproportionate impact on specific groups of the population has been named ‘slow violence’. It is a type of violence extended in time and space, which causes certain groups and places to become destined to be “sacrificed.”
The slow and systematic violence that has been going on for over more than four decades will be revealed by the designated Truth Commission. This Commission will need to be implemented according to the agreements of Saramurillo, signed by the Peruvian state in December 2016.
It is not only the total lack of support for these groups that is an issue, but even worse, the fact they have been publicly called out as terrorists and blackmailers. Several leaders have been persecuted, and they risk punishment as well. The public opinion seems to be convinced that the demands of these groups have been answered through different types of negotiation, dialogue and agreements. In this way, the ongoing dialogues and signed agreements portrays an image of strengthened or renovated relations between the state and indigenous peoples. But that image is false.
It is necessary to inform the urban society better about the completed processes, so they understand the claims of the indigenous peoples and the permanent conflict in the Loreto region. Unfortunately, the result of more than five years of dialogue between the State and the indigenous peoples from oil block 192 is even more distrust.
Likewise, it is correct to say that the process of ‘prior consultation’ carried out between May and August 2015 contributed to an increase in the distrust. Just because of that it cannot be used as an antecedent, a good practice of intercultural dialogue and respect of indigenous peoples’ right to prior consultation.
A sui generis process, affected by various elements
The process of prior consultation that was held in oil block 192 in 2015 was a very unique process (or sui generis, which is Latin for “unique in its own right”). This has been confirmed by Ex-Vice Minister of Interculturality Patricia Balbuena (from here onwards referred to as Ex-Vice Minister Balbuena): the case of this process of prior consultation of oil block 192 is a unique case, because it was the first one since oil exploitation began and was preceded by social conflicts. Moreover, these conflicts were channeled for four years through a negotiation board chaired by the National Office of Dialogue and Sustainability from the Presidency of the Ministers Council (ONDS-PCM) (Balbuena, 2016). She adds that not only the responsible sector had been summoned, but also others: “In the case of oil block 192, the Peruvian Ministry of Energy and Mines (MEM) called different sectors to participate in this process, and their representatives signed agreements they committed to within their competency framework. Nevertheless, as pointed out before, this is a ‘sui generis’ case”.
It is therefore necessary to complete and clarify the reading of Ex-Vice Minister Balbuena and we will do this based on our experience and our presence during, before and after the prior consultation process of FECONAT (Federation of Native Communities from the Upper Tiger River), the organization representing Kichwa people since the Nineties.
This process of previous consultation was not only unique because of the aforementioned reasons, but also because it took place in different spaces with different representations – in fact there were different processes – and it ultimately led to the signing of two acts of prior consultation with two different groups. The state decided suddenly that the process was concluded, without any agreements having been signed by the other remaining groups.
The process was also negatively affected by various other elements. Without claiming to be exhaustive, we will now mention some of them. First of all, the impact of the past has not been properly taken into account during the process, secondly, the process was affected by the parallel process of the Commission on Development, thirdly, it was disturbed by the parallel process of the new auctioning of the contract of oil block 192, and finally, the regulations of the process of prior consultation have not been respected.
Affected by the past
The case dealt with a first process of prior consultation from the indigenous peoples living in oil block 192 who had already been affected by oil company activity for more than 45 years. To put it differently: the potential future effects were not discussed, but rather of the already accumulated effects of oil activity in the past. During the process, FECONAT stated that the consultation for oil block 192 must take into account the fact that the area had been declared an environmental and sanitary emergency. Furthermore, the Kichwa people pointed out their great worries about the fact that there was no approved abandonment plan for the impacted zone. This of course caused more uncertainty about their land and villages. They indicated that it would be impossible to talk about future effects without taking into account the lack of solutions for the devastating effects of past oil activity. Accordingly, they demanded a new debate to be organized and talks to be started about the root causes of the accumulated effects, considering that ‘any activity within the context of a new exploration or exploitation would only worsen the already existing impact on our collective rights and our rights to live’ (Act of internal evaluation by the Kichwa people). This process of prior consultation in oil block 192 was thus held in a pre-existing context of years of suffering, contamination, protest and criminalization of the protest (several leaders of the Kichwa del Tigre people are legally prosecuted).
Ex-Vice Minister Balbuena (2016) wonders whether the communities are waiting for an answer from the State, if this would solely depend on extractive activities. Additionally, she wonders which institution can be expected to answer to the claims of other rights which arise from the processes of previous consultation. In the specific case of oil block 192, the claims did not originate from the consultation process, nor were they ever separated from the extractive activities. The claims have existed since much longer, as evidenced by the conflict situation and the negotiations from previous years. In this case, different answers were needed for the respective claims regarding land titling, intercultural education, intercultural health, etc., precisely because of the past impact of years of oil company activity (overlapping of rights, environmental contamination, etc.).
As the analysis did not take into account the previously accumulated effects, we can say that the quality of the analysis is debatable. And finally, it is also safe to assume that the state lost its opportunity to give an adequate response here, which could have been a start to fundamentally address these problems.
Affected by the parallel process of the Commission on Development
This leaves another particular matter to be brought to attention: the fact that there was a close link between the process of prior consultation and the negotiations around previous demands. These negotiations were carried out in the framework of the two Multisectoral Commissions (2012 and 2014). The negotiations dealt with by the last of the two Commissions, the so-called Commission on Development of the four basins, took place at the same time as the process of prior consultation did.
And yet, the demands of the peoples were successfully answered to. In its report (Executive Overview, November 2015), the National Office of Dialogue and Sustainability from the Presidency of the Ministers Council (ONDS-PCM) which chaired the Commission pointed out that “the negotiations in the Commission on Development have played a role in coming up with solutions for various issues, including environmental remediation, land titling, and providing basic services, as well as clean water”. However, in reality, things have been problematic for more than two years now. For instance, the water provided by water plants does not meet the basic standards, environmental remediation has not taken place yet, and the process of land titling hardly advances due to formalities and technical issues.
The fact that the ONDS does not mention any demands that are still unanswered or unfinished plans in its last report certainly stands out. Those plans included compensation for use of land and compensation for damage. The report also contains a faulty statement: “Dealing with these issues has also made it easier to carry out the process of prior consultation in oil block 192 (then called oil block 1-AB), which is operated by Pluspetrol Norte”. This statement is at odds with the facts: not a single contract has been signed during the process of prior consultation in oil block 192 by the groups who did previously sign the Final Act during the negotiations (Act of Lima, March 10th, 2015). That is why these groups resorted to protests, seeing as the state seemed to have decided on its own that the process of prior consultation was a finished matter. Furthermore, it can be gathered from these statements that worries exist that compliance with the Act of Lima interfered with the process of prior consultation. Likewise, it could be concluded that the negotiations of the Commission on Development were an obstacle to the process of prior consultation.
Affected by the parallel process of the auctioning of oil block 192
The process of prior consultation was also heavily affected by the very auctioning of oil block 192 and the parallelism that came with it. Less than four months before the culmination of Pluspetrol Norte S.A.’s contract (on August 29th, 2015), Perupetro S.A., a state-owned agency which takes care of promoting investments into hydrocarbons, decided to sell the concession rights of oil block 192 through public bidding. This occurred on May 14th, 2015. This decision was made before any plan could be approved or any agreement in regards to prior consultation could be set up. By July 2015, the following companies were qualified and authorised to participate in the bidding: Perenco Perú Petroleum Limited Sucursal del Perú, Pluspetrol Norte S.A., and Pacific Stratus Energy del Perú S.A. (the latter will be referred to as simply ‘Pacific’ from this point onward).
But at the end of July 2015, in the middle of negotiations during the process of prior consultation, Perupetro announced that the auctioning would not take place after all. None of the companies had come up with a proposition. Later, around the beginning of August 2015, Perupetro announced that it was considering setting up a contract for the extraction of hydrocarbons in order to continue production in oil block 192. This contract was being negotiated directly and could be set up either temporarily (2 years) or definitively (30 years). At this point, the uncertainties reached a new high point: to what end were the consultations being held? The members of FECONAT (more than 200), who had been negotiating with the state in Iquitos, considered that the ongoing process of prior consultation should be suspended.
Even though talks resumed a few days later in Lima (with far fewer representatives of the Kichwa peoples present), the lack of information in regards to the way that the prior consultation would be carried out caused more uncertainties and unsteadiness. After all, the consultation had been started up with different information in mind, and the possible implications, impacts, and consequences of the new situation (involving the direct award of temporal service contracts for a duration of only two years) were not properly cleared up.
According to the office of legal and procurement support of the Peruvian Ministry of Energy and Mines (MEM) (Report N°150-2015-MEM/OGJ, September 30th 2015), the process of prior consultation covered both the setting up of a temporal service contract and the previous license or service contract for the extraction of hydrocarbons in oil block 192.
At any rate, it is remarkable that the Vice Ministry of Interculturality (VMI) expressed its opinion before the MEM did. The VMI pointed out that the termination of the 2-year service contract for the extraction of hydrocarbons in oil block 192 would not have to be an a priori reason to start up a new process of prior consultation (Letter number 309-2015-VMI-MC, August 29th, 2015). The VMI was completely aware of the issues that were encountered during the process, especially concerning the lack of information about the way the consultation would take place, as well as the motivations, implications, and consequences.
Affected by a lack of compliance with the regulations
This brings us to a fourth point: it can be debated whether the regulations as described by Law 29785 and its Bylaw were fully respected during this process.
Article 12 of Law 29785 states: “State-owned bodies should provide information to the indigenous peoples or natives and their representatives, from the beginning of the process of prior consultation until the expected end of said process. This information should cover the motivation, impact, and consequences of the respective legislative or administrative measures taken”. Article 12 is relevant because of the aforementioned lack of provided information in regards to the way the consultation would take place, which caused confusion, uncertainties, and unsteadiness.
Article 15 was not complied with either. It stipulates that the agreements bring along certain obligations with them. Groups who signed agreements with the state two years ago are now complaining because the state does not comply with these agreements.
Ex-Vice Minister Balbuena admits that there are issues with the compliance. She mentions the following obstacles: “In a decentralized country, the central sector can only comply with the agreements as much as the regional governments allow it to, as they hold the power to implement them and can come across difficulties in doing so. A concrete example is oil block 192, where agreements concerning health and land titling depend on their respective implementation through local management. The series of formalities that need to be dealt with is complex, and the connection between the national and local level is difficult to maintain, even with the help of resources.” (2016). The question is whether these arguments are enough to justify the lack of compliance with the agreements.
Additionally, the guiding principles of good faith and non-conditioning were not respected (article 4 clause c of the Law, article 3 clause of the Bylaw). In their last report on oil block 192, the state argues that the process of prior consultation of oil block 192 has taken place according to the norms. It states that agreements were signed with one group, and that all possible steps have been taken in order to keep the negotiations with another group going (according to the state, this group impeded the negotiations). This statement shows the inequalities between the various parties during this sort of process, as the state itself also impeded the process at important moments. A moment that stands out is August 14th, 2015, when the topic of direct profit sharing was discussed. All various groups were present (and this was the only time this happened during the whole process) in the House of Peruvian Literature in Lima, together with, among others, Rosa Ortiz, who was the Minister of Energy and Mines at the time. The state proposed to create a social fund, which would be supported through regular contributions made by the contractor. The contributions would equal to 0.75% of the total worth of the fiscalised production. They would be deposited into a private trust. This needed to be included as a clause in the agreement, which is why the Minister declared that the proposal could not be further negotiated – it was take it or leave it. According to her, the negotiations were suffering too much under time pressure (the license of operator Pluspetrol Norte S.A. was about to end), and it was technically feasible to sign the agreement at that moment. One group (including the Kichwa from the Tiger river) accepted the proposal. They felt their right to direct profit sharing was being respected through this deal, regardless of the amount of money that would go into the fund, and that was the most important aspect for them. However, another group had its doubts about the proposed percentage and asked for another day in order to further consult themselves. But the state did not accept this request. A few days later, the process of prior consultation in oil block 192 was concluded, when two acts of prior consultation were signed by two groups. And yet, not all of the groups had signed. It is important to highlight the fact the state had impeded the negotiations by simply creating different groups and different forums for dialogue.
What happens next?
Some groups have already signed agreements about the process of prior consultation, while others have not. In any case, all groups have their reasons to demand that the state respects this process, which has been going on since 2015.
Those who have already signed the agreements should take note of what ex-Vice Minister Balbuena has stated: “At the moment, we cannot foresee the effects of a legal process like this, one that makes it necessary for the terms of the agreements to be complied with. The administrative channel does not provide any clarity about the system and the procedures that would be used either. And yet, the obligations that these agreements bring with them are precisely what makes them so powerful in the context of the process of prior consultation. As a result, the process is different from any other participatory forum” (2016).
In other recent news: two years have passed since a temporary service contract has been signed by both Perupetro and Pacific. However, said contract was only valid for two years. The indigenous peoples of oil block 192 have recently demanded that a new process of prior consultation should be started, seeing as the new contract is set to be valid for 30 years. (Petition from FEDIQUEP to MEM with N°2694268 on 4/4/2017; Addressed to MEM from ORIAP with N° 2684956 on 1/1/2017, unnumbered letter to MEM, Vice Ministry of Interculturality, and Perupetro from FECONAT and ORIAP on 2/8/2017. Note: FEDIQUEP, ORIAP, and the already mentioned FECONAT are all organizations representing indigenous peoples).With all of the aforementioned cases affecting them, there are more than enough arguments for the peoples to demand a new process.
The MEM formulated a response through its department of Directorate of Environmental Energy Affairs (DGAAE). They stated that research will be conducted to determine if the process of prior consultation was carried out properly, but only when the current temporary service contract has ended. (Letter number 1044-2017-MEM/DGAAE on 9/6/2017; Letter number 1045-2017-MEM/DGAAE on 9/6/2017).
But especially in this current situation, there is a lack of transparency surrounding this temporary service contract. In May 2017, during a meeting held in the city of Iquitos, Perupetro informed FECONAT and other organizations of the fact that the service contract with Pacific (which is now called Frontera Energy) would not end on August 30th, 2017 as originally planned. According to Perupetro, only 6 months of their contract have passed, meaning 18 more months will have to be accounted for once the North Peruvian pipeline is operative again (the North Peruvian pipeline is Peru’s largest oil pipeline). Due to the fact that the pipeline has been inoperative since 2016, the months since then were not counted as part of the 24 months described in the contract. Legally speaking, this is put forward by the company as a case of ‘force majeur.’ The company was able to continue production on February 16th, 2017, albeit only in a very limited manner. As a result, Perupetro claims this period could not be counted as part of the 24 months either. This means that the temporary service contract will likely end only in 2019, but this still depends on when the ONP will be active again. (Hill David, 2017) Regardless of the official statements on the matter, it has been noted that the production in oil block 192 has been increasing considerably.
The fact that the ONP is inoperative now is attributable to severe and persistent crude oil leakage in recent years. These cases of leakage have caused (and still cause) damage to the environment and the locals across various locations in the Peruvian Amazon. Oil transport through the North Peruvian pipeline is one of the responsibilities of Petroperú, the state-owned oil company. A Commission of Inquiry was set up by the Congress of the Republic in November 2016, for a period of 120 days. Recently, an additional 90 days have been added to this period. This Commission’s task is to find the causes for the oil leakages and to determine who is responsible for them. Thus, the Commission was aptly named “the Multi-Party Commission of Inquiry to determine the responsibility of Officials, Legal Persons, as well as Public and Private Institutions for the oil leakages that have occurred in the North Peruvian pipeline.”
It is also worth mentioning something about one of the most important agreements signed in Saramurillo in December 2016 between the State and the indigenous peoples. As a matter of fact, this agreement stipulates that the MEM is obligated to contact an independent company in order to perform an international study of the North Peruvian pipeline, as well as the pipelines of oil blocks 8 and 192. During this process, the company will be assisted by a commission of ten representatives from indigenous peoples.
The question is whether the ONP being inoperative really is a case of ‘force majeure’ or not. This is a (translated) definition of ‘force majeure’ or ‘fuerza mayor’ from the Spanish Legal Dictionary:
1. General. A set of circumstances which cannot be foreseen nor avoided and has an effect on the terms of an agreement. Exceptional natural disasters such as floods, earthquakes, lightning strikes, etc., are all typical cases of ‘force majeure.’ ‘Force majeure’ cancels out any contractual or extra-contractual liabilities that might otherwise present itself with private agreements or public administration.
“As stated many times before, for a case to be named ‘force majeure’, it not only needs to fit the criteria of being unforeseeable and unavoidable, like a fortuitous event, but its causes also need to be independent from the influence of the actions of the acting parties […]. Consequentially, examination is needed in order to verify if the situation is truly exceptional, unavoidable, or unforeseeable. If this is not the case, the situation is considered foreseeable to a certain extent, enough so that measures could have been adopted in order to have avoided the damaging results, or so that the policy measures for guaranteeing the continuation of all processes could be labelled as inadequate” (Statement by the Supreme Court of Spain, 3.ª, 31-X-2006, Resource. n.º 3952/2002).
2. Public International Law. A set of circumstances which cancels out any illegality an action carried out by a state or international organization that is not subjected to any international obligations may have. This is only the case if the action is caused by uncontrollable forces or unforeseen events, over which the state or organization does not hold any control, and if it ultimately makes it physically impossible to comply with the obligations in the context of the case.”
So, the real question is whether the poor state of the North Peruvian pipeline and the fact that it is inoperative can really be considered as an unforeseeable and unavoidable situation, as something out of the control of the State and other parties. In other words: could the cases of leakage truly not have been foreseen/avoided? That is the current position Perupetro finds itself in. The company struggles to defend itself from this position, but the Commission of Inquiry and the international study of the North Peruvian pipeline will without a doubt grant some clarity as to what caused the leakages and who is responsible for them. A few hypothetical causes include missing parts of the maintenance plans, poor use of the tools for environmental management, cases of corruption, etc.
Another key subject can be mentioned as well: the activities of Petroperú in oil block 192. Because of the rewriting of law N°30357 in October 2015, Perupetro was authorized to enter into a contract with Petroperú (the latter has the power to summon strategic partners). This contract would allow for the exploitation of hydrocarbons in oil block 192 – after evaluation and direct negotiations beforehand, at least.
At the end of July 2017, Perupetro informed Petroperú of the fact that it did not qualify for the contract regarding the operation of oil block 192. A few months earlier, during a meeting in May 2017 with indigenous peoples, Perupetro claimed that if the contract with Petroperú would not be established, oil block 192 would be sold through international competitive bidding to another oil company. Moreover, according to indigenous organisations, Perupetro already hosted on site-events in the communities of oil block 192.
However, at the beginning of August 2017, Petroperú and Frontera Energy formally put forward a proposition to start up a 30-year contract with Perupetro. According to Petroperú, they will not await the closure of the current temporary contract. Was this a violation of the right to prior consultation?
Indigenous peoples of oil block 192 demand more information and more clarity. They arranged an emergency meeting in the region in order to ask the State to clear up the situation. They demand their rights to be respected, and especially their right to prior consultation in the context of this new 30-year contract.