Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, May 27 -- Pluspetrol Norte has reduced production at one of two oil blocks in Peru and state energy company Petroperu may have to halt work at its Iquitos refinery in the Amazon due to protests by indigenous people.

"The position in respect to our operations has worsened since we last released information on May 19," Pluspetrol Norte said.

"We have had to reduce our production due to a lack of storage space, and due to the ongoing situation in which we can't transport petroleum on the North Peruvian pipeline," said the company, which produced about 32,000 b/d from the two fields in March: 16,099 b/d from Block 1-AB and 15,511 b/d from Block 8.

"Due to the reduction in production we have been obliged to temporarily suspend the presence of our workers, suppliers, and contract workers in the oil fields," the company added.

Pluspetrol Norte also warned that continuation of the protests could eventually affect the normal supply of oil to the government-run refinery in Iquitos.

Blocks 1AB and 8 lie in northern Peru, where indigenous communities have been protesting against a series of nine new investment decreed by the government, saying the decrees will lead to a private-sector takeover of their lands, along with their underlying mineral rights.

In addition to the oil pipeline, the 65-member tribes of the Peruvian Jungle Interethnic Development Association have blocked highways and waterways across six jungle provinces since early April.

Apart from seeking repeal of the nine decrees, the tribes also want the government to revise oil concessions in the Amazon jungle and establish reserves for so-called "uncontacted" tribes that live there in voluntary isolation.

Peru President Alan Garcia, who earlier this month declared a state of emergency and suspended some constitutional rights in the four provinces most affected, said his government's nine decrees are nonnegotiable.

"The lands of the Amazon belong to the entire nation, not to the small group that lives there," Garcia said.