By MILLIANA GILL-MEHAN
Native leaders from the Peruvian Amazon are outraged at yet another oil spill from Peru’s state-run oil company: Petroperú. Petroperú has caused reprehensible damage to the Peruvian Amazon, the second largest part of the rainforest after Brazil, sparking a widespread protest by the Indigenous people. Indigenous leaders travelled to the United States in late November to lobby banks to cut financial ties with the company.
It is estimated that over 2,500 barrels of oil were spilled in September, thus polluting the region’s water sources. The Indigenous communities rely on the jungle, and the people’s quality of life is directly restricted by these oil companies. Leaders from the Achuar del Pastaza and Wampus people hold Petroperú rightly accountable for the violation of their human rights, by limiting their access and ability to fish and hunt in these areas.
Oil spills are unfortunately not uncommon in the region. An Oxfam report called The Shadow of Oil documented 474 spills along the North Peruvian Pipeline between 2000 and 2012. This figure is extraordinary; the damage the oil spills have created for the Indigenous people is deplorable. What is worse is that the general attorney’s office blames the latest spill as an act of sabotage by the Ingenious individuals, who supposedly cut the North Peruvian pipeline. The Oxfam report sufficiently refutes this idea and places the reasoning for the poorly managed pipeline on operational failures and the corrosion of the pipes. The condition of this pipeline is atrocious and despite much capital being injected into Petroperú to fix these issues, little has been done to save the environment.
Petroperú reported that it intended to seek $1.6bn in investment to reinitiate drilling and oil extraction in the Amazon. This financial request has sparked further outrage due to the company’s horrific environmental history. The Indigenous communities are protesting against both the Peruvian government and banks to stop oil exploration and investment in this region.
Moreover, Petroperú’s financial situation has deteriorated rapidly this year. In March 2022, the rating agency S&P downgraded Petroperú to junk, restricting its access to short-term credit over the company’s mismanagement and liquidity issues. The company failed to produce an audit of its 2021 statements amid a growing scandal between the Peruvian President Pedro Castillo and a former chief of Petroperú. However, it should be stated that Petroperú supplies almost 50% of the local fuel market, which creates complications for the country as this is such a major source of oil. The government of Peru has always had deep ties with the company, and President Castillo is no different. In addition to this, Peru is ranked 105th out of 180 countries in the 2021 Transparency International Corruption Perceptions Index. Castillo’s government is unstable and shrouded in corruption cases tied with Petroperú, thus making it more challenging for Indigenous people to have sufficient persuasive power. Due to the corrupt nature of the company and lack of transparency, it makes little financial sense to invest in the oil company.
According to Bloomberg Terminal, a range of top banks including JPMorgan Chase, Bank of America, Goldman Sachs, Deutsche Bank and BNP Paribas are all involved in financing Petroperú. However, the banks should be aware that through financing this company they are directly infringing on the rights of the people and subsequently causing irreparable damage to the environment. The banks must do something and impose a due diligence policy to be aware of the risks involved in this company. With many banks dedicated to their ESG policies, aiming to achieve net zero carbon emissions by 2050, they must realign their investments away from oil companies that not only face corruption charges but also negatively impact the Indigenous communities. Deutsche Bank has met with Indigenous leaders from the Achuar del Pastaza and Wampis Nations to discuss these issues; however, many are not confident that this would be much of a success.
It not only makes financial and ethical sense to stop investments in the company but also environmentally, it is imperative for the region and those who live there. Although the fight for the Indigenous people has unfortunately not been short-lived, they have been campaigning since the pipeline’s construction. I have highlighted many of the reasons as to why Petroperú is a disaster for the environment and the economy; it remains unclear what the next step shall be for the company tied so heavily with the government.
Image: Yu Chuan Shan/ Flickr