Peru is slashing royalties on oil and gas production to incentivize exploration and development of potential fields including several offshore, according to Reuters.
The move came two days after neighbouring Colombia announced a similar move, Bogota giving 25% discounts on taxes for offshore Caribbean blocks.
In Peru’s case it will mean royalties that now stand at 20% being lowered to 5%, a reduction of 75%.
Lima is calculating that a drop in the government’s take per transaction will be offset by the overall hoped-for increase in investment.
Perupetro, the state energy agency responsible for negotiating oil contracts, plans to open bidding on at least six offshore oil blocks by early next year when the new royalties system should be ready.