November 30, 2018 / 10:46 PM / 13 days ago

Frontera Energy oil operations in Peru threatened by pipe rupture

LIMA, Nov 30 (Reuters) - Canada's Frontera Energy Corp could be forced to halt operations in Peru's largest oil block if a key pipeline ruptured amid indigenous protests is not promptly repaired, state oil company Petroperu said on Friday.

The pipeline, in a remote corner of Peru's Amazon, was attacked earlier this week in protests over municipal election results, causing it to spew thousands of gallons, Petroperu said.

The rupture has already forced Frontera to slash production by 12,000 barrels of crude daily, Manuel Ugaz, manager for Petroperu subsidiary Oleoducto Peru, told reporters.

"If the problem isn't immediately solved, either with a provisional repair or a permanent one, Frontera will need to shut down production at all its wells," Ugaz said.

Frontera did not immediately respond to requests for comment.

Frontera operates Block 192, an oil-rich concession in the Amazon with reserves of 100 million barrels of petroleum. The company's contract expires in 2019.

Vandals have repeatedly attacked the 1,106 km (687 mile) pipeline over the past several years, wreaking havoc on production and spooking investors. The pipe transports crude from jungle oil blocks tapped by Frontera to Petroperu's refinery on the Pacific coast.

Ugaz said the Canadian oil company could lose $200,000 daily if it is forced to halt production.

Petroperu estimates that 8,000 barrels of oil spilled following the attack on the pipeline, although it says none of that oil has reached waterways. The state oil company has since stopped pumping crude through the pipe.

Beatriz Alva Hart, a Petroperu manager for relations with communities near the pipeline, said villagers from the Morona district confessed to the attack.

But law enforcement has been unable to stop the ongoing protest, contain the spill or fix the pipe, she said.

"To date, they are not allowing us to fix the pipe," she said. "It's an environmental attack that affects all Peruvians."

Representatives from the indigenous community could not be immediately located for comment.

Reporting by Marco Aquino, writing by Dave Sherwood, Editing by Rosalba O'Brien

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