Occidental, Peru Reach Interim Accord

Occidental Petroleum said Wednesday that it has obtained an interim agreement that will permit it to continue operating in Peru, whose government had rescinded the company’s right to pump oil there in August.

The compensation agreement with Peru’s national oil company permits Los Angeles-based Oxy to continue oil operations there for another 90 days while it attempts to negotiate a new contract.

The Peruvian government has claimed that Oxy failed to use its tax breaks to boost exploration in that country. Occidental has maintained that it abided by the terms of its contracts and Peruvian laws.

Occidental produces about 50% of Peru’s total oil production. Its share of Peruvian oil production is about 51,000 barrels a day, or 15% of Occidental’s worldwide total. The company exports about 13,000 barrels a day from Peru.

The company said that, during the 90-day period, Petroperu, the government oil company, will pay Occidental an undisclosed amount per barrel in Peruvian currency to cover Occidental’s cash operating costs and general administrative expenses. The company said that, if the lower payments are in effect for the full 90 days, its operations in Peru would suffer a loss.

Occidental said that, while it hasn’t given up any legal rights during the interim period, it will seek to sign a new contract with Petroperu.

Occidental has produced oil in Peru since 1973. In February, 1984, it asked the government, without success, to increase its share of production from 50% to 80%. It also asked for a break on taxes.