Business Notes ENERGY

Infested with terrorists, bandits and drug thugs, Peru's Upper Huallaga Valley would seem to be one of the least hospitable places on earth for a major U.S. company to go in search of resources. Yet Mobil Oil is hard at work on a $107 million project to explore for oil and natural gas in the energy-rich jungle region, which happens to produce nearly half the coca leaves used to supply Americans with cocaine.

"If you are looking to find large new reserves," explains Mobil spokesman John Lord, "you simply have to go to the more remote regions of the world." However, Lord noted, "we don't even know if substantial oil reserves exist in the region, let alone if we're going to start drilling soon."

Peru, which would receive some 45% of the oil revenues from a Mobil find, agreed to provide security for company crews and to fly them to remote sites aboard military helicopters. Peru furnished similar services to Occidental Petroleum, which recently completed a yearlong exploration of a less dangerous region about 120 miles to the east. Occidental is currently evaluating its findings.