Oil company says it would cost US$65 million to clean-up oil spill in Peru

Feb 22, 2022 News

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Kaieteur News – The clean-up and remediation of approximately 12,000 barrels of crude that contaminated the shores and waters of Peru – will costs US$65 million – this was announced by Spanish oil giant, Repsol’s Chief Executive Officer (CEO), Josu Jon Imaz.

Imaz told analysts on a conference call, “What we are seeing today in cost terms could be around $65 million, more or less … this figure could increase in coming weeks.” The CEO added, “A main part of this figure is going to be covered by insurance companies and so on.”
The oil spill occurred on January 15, 2022 at one of the La Pampilla refineries off the coast of Ventanilla in the region of Lima, Peru. It was reported that the spill was caused by shock waves from an undersea volcanic eruption near Tonga in the South Pacific Ocean. At the time of the undersea eruption, Suezmax tanker, Mare Doricum, was offloading a shipment of Brazilian crude oil at one of La Pampilla refinery’s offshore mooring buoys, and as such, a quantity of the cargo was released.
Repsol had underreported the quantity of crude that was spilled but later investigations by Peru’s Agency for Environmental Assessment and Control (OEFA) revealed that almost 12,000 barrels of oils had spilled – more than double the amount that was initially reported by the company.
More than a month after the ecological disaster, the country is still grappling with the clean-up. A Peruvian official recently announced that the company is not fulfilling its obligation. However, the country continues to take actions against Repsol.
Last week, Peru’s Ministry of Environment (MINAM) in a press release noted that the OEFA – an agency attached to the Ministry, has reported that Repsol has paid three coercive fines of a total amount of Sol$1,380,000 (US$362,285). It was stated that the three coercive fines were for the failure to comply with three of the 14 measures ordered: identification of the areas affected by the spill, cleaning of the affected areas, and containment and recovery of hydrocarbons (crude).
It was stated that in light of the three breaches by the oil company, the OEFA has also initiated sanctioning administrative procedures, where the fines can be up to Sol$55,200,000 (US$14,808,852). To this end, it was noted that, if the oil company continues to fail to comply with the 14 administrative measures issued by the OEFA, new coercive fines will be successively imposed until compliance. In addition, if responsibility for violations of environmental regulations is determined, fines of up to Sol$304,060,000 (US$81,572,097) is likely.
It was also stated that, “the OEFA as the environmental control authority, reaffirms its commitment to continue carrying out daily supervision to verify compliance with the 14 measures ordered from Repsol and imposing the respective sanctions for non-compliance with them.”
Prior to the aforementioned fines being imposed against the company, this publication had reported that the first periodic fine that was initiated against the Spanish oil giant, was in the sum of Sol$460,000 (US$121,500) for the non-compliance of identifying the areas affected by the oil spill.
Kaieteur News had reported that following the devastating oil spill, several Peruvian officials had called for the oil company to compensate for what they described as an ‘ecological disaster’ that has occurred in Lima in recent times.
The first action that was taken against the company is when Judge Romualdo Aguedo on Friday, January 28, 2022 granted the order to prevent the four executives from leaving the country. Peruvian media reported that Judge Aguedo imposed an 18-month ban on the grounds of the potential risk that the officials might leave Peru.
Those that have been barred are refinery manager, Jaime Fernández-Cuesta Luca de Tena; terminal manager, Renzo Alejandro Tejada Mackenzie; environmental manager, Gisela Cecilia Posadas Jhong and production manager, José Gregorio Reyes Ruiz.
In taking additional steps, it was revealed by Peru’s former Minister of the Environment, Rubén Ramirez on Monday, January 31, 2022, that the government had taken the decision to suspend the company’s hydrocarbon loading and unloading activities. In other words, it meant that Repsol’s operation in the country was halted until it can substantially prove that another oil spill will not occur again in its waters.
However, in an update it was revealed that a fuel shortage in Peru had forced the country’s Agency for Environmental Assessment and Enforcement (OEFA) to lift the suspension temporarily of the operations of Repsol. However, the company will only be allowed to continue its operations for 10 days and under supervision from the OEFA. That 10 days period has since come to an end and the Peruvian government has signalled that they have other alternative source to obtain fuel.
As the Government of Peru takes action to protect its people and its environment, Guyana in contrast, continues to give American oil giant, ExxonMobil, permission to operate without full coverage insurance to cater to such a disastrous oil spill. Just recently, ExxonMobil announced that it has commenced oil production at Guyana’s second offshore development area called Liza Phase Two in the Stabroek Block.
Among the oil companies working in Guyana’s backyard is the very oil company –Repsol – that caused the oil spill in Peru.

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