Juan Pari

The Energy Crisis and the Ukraine-Russia War

This is the edited transcript of the presentation by Juan Pari to Panel 2, “Peace Through Development,” of the Schiller Institute’s Nov. 22 conference, “For World Peace—Stop the Danger of Nuclear War: Third Seminar of Political and Social Leaders of the World.”

Mr. Pari is a former Peruvian Congressman (2009–2011 and 2011–2016).

He spoke in Spanish with simultaneous translation; English subtitles have been provided.

The full proceedings of the conference are available at the Schiller Institute website.

Peace is the primary condition for the survival of our planet. With peace, we can work to eliminate hunger. With peace, we can mitigate the impact of climate change caused by man’s predatory economic models and by nature. With peace, we can learn to be more human, and “being more human” implies the need to build a real community of nations for the governance of the world, with tolerance, coexistence, without subjugation or foreign interference into nations’ decisions. This means a multipolar world with diverse points of view, with different cultures and an ability to understand each other.

Today we are living through a military conflict between Russia and Ukraine, but it’s not just these two countries that are involved: the European Union and the United States are behind it, threatening to expand this conflict for geopolitical control of the planet. And the impact of this conflict is not just local—it extends throughout the world and in many different ways: in the production of food, fertilizers and fuel, as well as by disrupting the markets.

This war scenario has also been exposing the vulnerability of many nations that have no food sovereignty, much less energy sovereignty. In our country, Peru, the development of that vulnerability was accompanied by the weakening of the state to which we were driven by the neo-liberal policies of the 1990s. In the Peruvian case, the implementation of those policies resulted in the dismantling of Petroperú, the state oil company, which satisfied the country’s demand at a particular moment of our nation’s history.

In 1994, oil production amounted to 127,000 barrels per day, which corresponded to a demand that existed in the market at that time. But with the dismemberment of the state company and the privatization of its productive units, such as [the creation] of private lots and the privatization of each part of its supply chain, production has dropped. Today, in 2022, with a greater fuel demand amounting to 250,000 bpd, crude oil production has dropped to 40,000 bpd. The Talara Refinery was paralyzed in order to build another refinery on top of it, which for many years wiped out the country’s refining capacity. Petroperú today has been reduced to a fuel importing company and wholesale distributor, with no possibility of reaching the final consumer, and with a broken market share.

The framework of corruption that allowed this destruction and weakening of the state was empowered at different levels of government. The vulnerability caused by bad national policies is felt and seen at the conjuncture of this conflict. According to information from Perupetro, the entity in charge of prospecting and arranging hydrocarbon concessions, Peru has a hydrocarbon potential of 10 billion barrels of oil equivalent across the length and breadth of its territory, including offshore reserves.

With its current reserves, Peru could produce 190,000 bpd of oil. It has 18 basins with 83 million hectares, the majority of which have proven oil potential. We have the resources to meet a large part of the country’s demand, combining and developing other energy alternatives which could allow us to build a new matrix. We have gas, and with our geography and our country’s varied ecosystems, it will be possible to develop wind, solar, hydro, and thermal energy. Yes, it is possible to be a country with energy security and sovereignty for its development. Natural resources respond to a moment of history and we have to be very clear about this.

On our continent, there were the Iron and Bronze Ages. In the last century, Peru, Chile and Bolivia were engaged in a war known as the war for guano or saltpeter, which was the response to a specific period of history. Today, who fights for guano or saltpeter?

Well, today the situation requires that we have a demand that has to be addressed and met with the resources that are available and are appropriate. We have to respond to reality’s demand, and that still involves hydrocarbons. We know that fossil fuels will go down in history and will be replaced by cleaner and more efficient forms of energy, but we have to deal with the present while at the same time perhaps begin to build a new energy matrix, preparing for the new demands made on us by life, the economy and the development of our nations.

The war between Russia and Ukraine demands that the world’s nations build energy security and sovereignty. We can’t put our nations at risk due to the vagaries of globalization. There are things like food and energy that can’t be subjected to the petty interests of big powers. We must recognize that there are many weaknesses in countries, and we have to work to overcome them. [There are] weaknesses in the state and weaknesses in the institutions. In Peru, we are living through a political crisis, a crisis of the parties, the ideologization both of the right and the left, divorced from reality and the country’s needs, with ill-defined strategic policies, policies on food, energy, industry and the development of the country’s capacities.

And they continue, as long as there are still perverse interests encrusted in politics and in the economy—above the public interest—which lead to corrupt practices at different levels of the state. These weaknesses contribute to accentuating the vulnerabilities caused by policies that are mistaken in some cases, and subservient in others, despite the fact that reality demands that energy security be established.

Unfortunately, today there are voices that repeat the credo of globalism, that the forces of the market, now international, will take care of everything. They tell us, why produce? Why worry about energy security? The energy can be bought and that way everything will be taken care of. Taking advantage of the combined vulnerabilities created by multiple mistakes, they call for the dismemberment of what little remains of Petroperú, which belongs to all Peruvians.

The reality is clear. Reality makes demands on us. Without energy security we cannot guarantee the development of the country.