Law N° 26221, Organic Law of Hydrocarbons, in force since November 18, 1993, and Sole Consolidated Text approved by Supreme Decree Nº 042-2005-EM, their purpose is to promote investment in exploration and exploitation of hydrocarbon activities. Along these lines, PERUPETRO S.A. was created as a Private Law State Company of the Energy and Mines Sector, whose main functions are, inter alia, promote investment in the exploration and exploitation of hydrocarbons activities, and negotiate, conclude and monitor, as the Contractor, by the authority under the State, the Contracts and technical evaluation agreements.
In merit of this law, the State promotes the development of hydrocarbon activities on the basis of free competition and free access to economic activity, ensuring legal stability of the contracts as stated in article 62° of the Constitution of Peru, as well as the stability of fiscal and exchange rate prevailing at the date of the Contract. Similarly, article 66º of the Constitution of Peru states that natural resources, renewable and non-renewable, are the patrimony of the Nation; that the State is sovereign in its use; and, by organic law establishes the conditions of its use and its granting to private. The concession grants the holder a property right, subject to that legal regulation.
In this regard, the Law N° 26221 provides that the exploration and exploitation of hydrocarbons activities shall be made in the form of License Contracts, Service Contracts or other forms of contracting authorized by the Ministry of Energy and Mines, which are governed by private law and that once approved and signed, may only be amended by written agreement between the parties, the amendments must be approved by Supreme Decree.
According to current regulations, the Public Administration Entities operating in the context of hydrocarbon activities are, basically the Ministry of Energy and Mines, who has to develop, approve, propose and implement the policy of the Hydrocarbons Subsector, as well as to dictate other relevant regulations; the Supervisory Agency for Investment in Energy and Mining - OSINERGMIN as the body responsible for overseeing the legal and technical aspects of hydrocarbon activities in the country; and the Ministry of Environment, responsible among other things of the conservation and sustainable use of natural resources, biodiversity and protected areas, as well as to ensure the prevention of environmental and natural resources degradation and reverse the negative processes that affect them.
It is worth mentioning that the Ministry of Energy and Mines has responsibility within the Hydrocarbons Sub sector through their relevant line agencies, which are the General Directorate of Hydrocarbons - GDH, whose primary mission is to regulate and promote private investment in hydrocarbons and the General Directorate of Environmental Energetic Affairs - GDEEA, responsible for promoting the implementation of activities aimed at environmental conservation and protection relating to the development of energetic activities.
For its part, the Natural Protected Areas National Service - NPANS (in replacement of INRENA) is the technician public body under the Ministry of Environment, which has the function of approving and establishing the technical and administrative criteria and procedures for the establishment and management of Natural Protected Areas.