Peru Holds Largest Number of Amazon Oil and Gas Pre-Production Blocks Amidst Operational and Financial Challenges

Peru currently has 173 oil and gas lease blocks, with 59%—85 blocks—located in the Amazon, covering 48 million hectares. This is the highest concentration compared to neighboring Colombia’s 68 and Brazil’s 53 blocks. However, 17% of Peru’s leases overlap with protected areas and over 25% with Indigenous territories, including Kukama-Kukamiria, Achuar, and Quechua communities, increasing social and environmental risks. Oil exploitation in these areas has triggered water contamination, deforestation, and increased illegal activities, impacting Indigenous livelihoods and cultures, particularly around major rivers such as the Marañón and Ucayali. The Northern Peruvian Oil Pipeline, crossing several leases and Indigenous lands, has experienced multiple spills, amplifying concerns during ongoing block development.

Despite Peru holding estimated proved oil reserves of 671 million barrels (42nd globally) and natural gas reserves of 15 trillion cubic feet, crude oil production has trended downwards since the mid-1990s, with only a modest increase in liquid fuels production due to natural gas liquids. Production averaged 125,000 barrels per day in 2024, ranking Peru among Latin America’s top producers, but a projected reduction in PetroTal’s output from 18,560 bpd in 2025 to potentially as low as 12,000 bpd in 2026 signals a declining trend intensified by regulatory delays and limited new exploration permits. The upstream sector’s investment climate remains constrained by social conflicts and permit bottlenecks, limiting issuance of new blocks.

Financially, state-owned Petroperú faces severe strain, posting losses of $479 million in 2025 and debts surpassing $760 million by year-end. The company’s costly $6.5 billion Talara refinery upgrade doubled initial projections, contributed to loss of investment-grade rating, and necessitated emergency government decrees permitting private investment and operational restructuring. Petroperú manages six low-production blocks and a nationwide fuel distribution network, positioning itself for partial privatization to regain stability.

Local communities benefit unevenly from oil revenues; municipalities like Mazán in Loreto receive significant funds tied to oil activity but suffer from infrastructure deficits and persistent poverty, highlighting governance challenges in deploying resource wealth effectively. Upcoming international bidding processes for producing blocks such as I, VI, and Z-69 in Piura emphasize investments with social and environmental clauses to improve operational sustainability. Overall, Peru’s Amazon oil and gas sector is at a crossroads, balancing expansion and revenue generation against socio-environmental preservation and sectoral modernization imperatives.