PERU LNG 2021 Annual Report

ANNUAL REPORT PERU LNG 2021 CHAPTER 4 OUR ORGANIZATION THE HYDROCARBONS SECTOR IN PERU PERU LNG's activities are subject to current Peruvian law. The Hydrocarbons Act Nº 26221, which regulates the sector in Peru says that the Peruvian State encourages the development of hydrocarbons on the basis of free competition and free access to economic activities. For this purpose it guarantees the legal stability of contracts, as established in article 62 of the Peruvian Constitution, as well as a stable tax and exchange rate regime. The Hydrocarbons Act also states that exploration and extraction of hydrocarbons must take place through license and services contracts, as well as other types of contract governed by private law and authorized by the Ministry of Energy and Mining (MEM). Contracts that have been approved and signed can be modified by written agreement between the parties, subject to approval by supreme decree. The legal framework for the hydrocarbons sector, which regulates and supports the activities of PERU LNG, consists of the following principal legislation: Law N° 26221, Hydrocarbons Act; Supreme Decree No 051-93-EM: Regulations Concerning Hydrocarbons Refining and Processing; Law Nº 28176: Promotion of Investment in Natural Gas Processing Plants Act; Supreme Decree Nº 031-2004-EM: Executive Regulations to the Promotion of Investment in Natural Gas Processing Plants Act; Supreme Decree No 032-2004-EM: Regulations Concerning Hydrocarbons Exploration and Extraction; Supreme Decree No 042-2005-EM: Approved Text of the Hydrocarbons Act; Supreme Decree No 081-2007-EM: Regulation for the Carriage of Hydrocarbons through Pipelines; Supreme Decree Nº 043-2007-EM: Hydrocarbons Activities Safety Regulations. The government authorities having a fundamental role in the hydrocarbons sector are the Ministry of Energy and Mining (MEM) and two regulatory authorities: the Supervising Body for Investment in Energy and Mining (OSINERGMIN) and the Environmental Monitoring and Evaluation Authority (OEFA). The MEM is responsible for designing general policies for the sector and, as the grantor, for awarding concessions. Osinergmin answers to the Prime Minister's Office and is responsible for establishing gas transport and distribution tariffs. It also monitors compliance with the obligations assumed by concessionaires, which are stipulated in the respective contracts and applicable legislation, as well as supervising the quality of the service provided, specifically the safety regulations and standards applicable to these activities. The OEFA, a dependency of the Environment Ministry, is responsible for ensuring that individuals and public and private entities comply with environmental legislation. It carries out checks, supervision, control and monitoring, and imposes sanctions in environmental matters. 20 20

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