The Revolutionary Government of the Armed Forces of Peru under the leadership of General Juan Velasco Alvarado assumed the government of Peru on October 3, 1968. One reason given for the assumption of power was that Peruvian interests had been severely damaged in the Act of Talara of August 13, 1968. After nullifying the Act of Talara, the Government expropriated the International Petroleum Company (IPC) refinery in Talara. As revealed in 1974 by the publication of the Revolutionary Government's plan of strategy, "Plan Inca," the Peruvian military had a clear idea of what it believed the situation of the Peruvian petroleum industry was on October 3, 1968, what its objective was regarding that industry, and what actions it needed to take in furtherance of that objective.
The Revolutionary Government's plans to end the petroleum concession system were subsequently placed into law by Decree Law No. 17440, which states that petroleum deposits and deposits of analogous hydrocarbons are the property of the State and cannot be alienated or relinquished. The petroleum industry and marketing of petroleum and analogous hydrocarbons and derivatives, as well as basic petrochemicals, are of national interest, public utility, and indispensable for the integral security ("seguridad integral") of the State.
As of February 20, 1969, the effective date of Decree Law No.17440, the petroleum concession system was abolished, although all acquired rights were to be respected. Under the Decree Law, the petroleum industry and all marketing of petroleum and analogous hydrocarbons is to be carried out primarily by the State. Private companies can bid for the rights to carry out prospecting, exploration, exploitation, and manufacturing under a contract system, in accordance with the State's interests, as expressed through the Ministry of Energy and Mines or the state oil company, Empresa Petrolera Fiscal (EPF).
Stanley F. Rose,
The Development of Peruvian Law for Petroleum Subcontractors,
9 Vanderbilt Law Review
Available at: https://scholarship.law.vanderbilt.edu/vjtl/vol9/iss3/8