Peru studies rescinding Repsol's contract to operate La Pampilla refinery over oil spill

The Peruvian government is studying rescinding Repsol's contract to operate the La Pampilla refinery if an investigation finds evidence of negligence in a recent oil spill, a senior government official said Jan. 24.

Repsol's 117,000 b/d La Pampilla refinery outside Lima reported a 6,000 barrel oil spill by the Italian-owned Mare Doricum tanker on Jan. 15.

Repsol, which blames rough seas caused by a volcanic eruption in Tonga, holds legal responsibility for the spill, cabinet chief Mirtha Vasquez told reporters in Lima. The government gave Repsol 10 days to complete the clean-up, a process environmentalists say may take years.

"We're evaluating legal aspects. We can't yet say whether we're going to suspend their license," Vasquez said. "Any company that carries out risky operations must assume responsibility for damages and the indemnity."

The special prosecutor's office has filed charges against Repsol for polluting nearby marine reserves, and the government may also seek international arbitration against the company, according to Environment Minister Ruben Ramirez, who declared an environmental emergency.

Ramirez added the government has requested help in the clean-up from the Spanish government. The UN and the Inter-American Development Bank have already pledged to send teams of experts.

While the government has suspended operations at one of the refinery's four marine terminals, the spill hasn't affected operations at the refinery, Repsol Peru country manager Jaine Fernandez-Cuesta said Jan. 24.

The company has deployed 1,800 workers, 55 boats, seven floating tanks, five skimmers and 2,800 meters of containment booms and brought in Brazilian environmental consultant firm Aiuka, according to the refinery.

"Clean-up work both on land and out at sea is progressing favorably," Repsol said Jan. 23 in a statement.

The spill, which has polluted over 1,500 hectares of Pacific Ocean beaches and islands and killed a vast variety of marine wildlife, will also have a major economic impact. Peru's Pacific coast is home to some of the world's richest fishing grounds, and the country's $3 billion/year fishing industry and summer tourism in the Southern Hemisphere are losing millions, according to trade groups.

"We share the legitimate concern of the citizenry regarding this lamentable incident," Peru's National Society of Mining, Petroleum & Energy said in a statement. "We reiterate our request that Repsol makes every effort to solve the consequences of the spill as quickly as possible."

La Pampilla, which completed a $470 million expansion in 2016, competes with state Petroperu's 62,000 b/d Talara refinery. Repsol won a contract to operate the refinery during a privatization process in 1996.