According to this law, all hydrocarbon reservoirs are the property of the state. The associated regulatory structure is composed of three main institutions: the Ministry of Energy and Mines, responsible for elaborating and enforcing policies for the oil and gas sector; the Supervisory Agency for Investment in Energy and Mining (OSINERG), which is the organisation in charge of supervising legal and technical aspects of oil and gas activities; and the National Oil Company (PERUPETRO S.A.), which holds pertaining properties rights and shall promote investment in hydrocarbon exploration and production activities.
Thus, PERUPETRO is the contracting party, responsible for negotiating, celebrating and supervising contracts for oil and gas developments. This can occur through licenses, where royalties are due, or service agreements. This company must deliver to the public treasury the income resulting from established contracts, minus an approved share of maximum 1.5% to cover operational costs.
The law further outlines that the exploitation and economic recovery of hydrocarbon reserves shall comply with environmental protection regulations and be carried out in accordance with generally accepted technical and economic principles used by the international oil and gas industry. It also states requirements related to information provision.
With regards to natural gas, the regulation indicates that gas not used in operations may be commercialized or reinjected in the reservoir. To the extent that natural gas is not used, commercialized or reinjected, the contractor may request an authorisation from the Ministry of Energy and Mines to flare the gas.