Peru LNG Holds
Official Signing and Site Dedication with President Toledo
Peru LNG January 12, 2006 Peru LNG, a partnership between Hunt Oil Company, SK Corporation and Repsol YPF announced that a ceremony was held today at Pampa Melchorita with special guests President Alejandro Toledo of Peru; Ray L. Hunt, CEO of Hunt Oil Company, Jeong Joon Yu, Senior Vice President of SK Corporation, and Antonio Brufau, CEO of Repsol YPF, for the purpose of dedicating the Liquefied Natural Gas Plant construction site and signing the official Investment Agreement between the Peru LNG partnership and the Government of Peru. Participating in the ceremony at Km169 on the South Pan-American Highway along with the partnership representatives and President Toledo was Peru's Minister of Energy and Mines, Engineer Glodomiro Sanchez. "This project represents for Peru an approximate investment of US$2.5 billion and additional revenues for the government of over US$200 million per year in royalties and taxes", said Alejandro Toledo, Constitutional President of Peru. Ray L. Hunt, CEO of Hunt Oil Company, said, "Today is a day for national celebration as what has brought us all together on this site at this time is the beginning of a new era in the prosperity of the Republic of Peru -- an era that will benefit every citizen of this great country and help establish the Republic of Peru as a stable and responsible leader in the family of nations which constitute Latin America." "For Repsol YPF, its commitment to this interesting project represents a significant step forward in achieving its expectations of growing in the Upstream business and increasing its participation in LNG businesses", said Antonio Brufau, CEO of Repsol YPF. "SK Corporation, together with other project partners, will make utmost efforts to bring out the success of oil & gas development and LNG projects in Peru, and do our best to work more closely with Peruvian government to strengthen the energy and economic cooperation between Peru and Korea", said Jeong Joon Yu, CEO of SK E&P Co. and Senior Vice President of SK Corporation. "Peru has been blessed in terms of having a political system which is very much aware of its responsibilities to the people of Peru both today, and for many generations to come. The result of the stability and foresight that is represented by the Government of Peru is why we have gathered here today to dedicate the site and sign this most important Investment Agreement", said Mr. Hunt. "Peru has always demonstrated compliance with the rules of the game and legal stability, which has allowed this ongoing economic growth", said Carlos del Solar, Director of PLNG and President and General Manager of Hunt Oil Company, Peru. |
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Ready for scheduling, ECI has Economizer conversion systems ready for Peru, Brazil and UK. Peru will be the first locomotive to operate with a Economizer system while both UK and Brazil expect to operate Cummins KTA 50 generator sets. Paul Jensen Scott Jensen |
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Natural Gas
reserves of 8.7 trillion OGJ (1/1/06) Peru wants to increasingly use natural gas to satisfy the country’s energy needs. According to OGJ (1/1/06), Peru has proven natural gas reserves of 8.7 trillion cubic feet (Tcf), the fifth-largest amount in South America. However, Peru’s Deputy Minister of Mines and Energy has indicated that once seismic work is complete on Block 56, Peru’s proven reserves could increase to 15 -16 Tcf. In 2003, the country produced and consumed 19.8 billion cubic feet (Bcf) of natural gas, a 21 percent increase from the previous year. In coming years, Peru will likely become a net exporter of natural gas as the Camisea project comes fully on-stream (see below). Besides Camisea, the largest concentrations of Peru's natural gas production include the Aguaytia gas field (Maple Gas) in central Peru, Block X (Petrobras) in the northwest region, and Block Z-2B (Petro-Tech) located off the northwest coast. To help mitigate Peru’s high oil import bill, the Peruvian government is looking to implement a plan that will stimulate natural gas consumption in the country. The plan targets public and private transportation, by converting vehicles to run on natural gas. Other Developments In September 2005, Ecuador’s Ministry of Energy signed a Memorandum of Understanding (MoU) with BPZ Energy in which Peru could export up to 1.1 Tcf of natural gas to Ecuador over a 15-year period. Exports of the natural gas could reach Ecuador as early as October 2006. In 2004, BPZ Energy announced that it had reached agreements to send natural gas from its offshore Block Z-1 to power plants in Peru and southern Ecuador. The project would initially supply 74 Mmcf/d of natural gas to three electricity generators in Arenilla, Ecuador, with an eventual extension to Guayaquil. BPZ also planned to construct a gas-fired power plant in Peru that would source gas from the Block Z-1 fields. Analysts estimate that Block Z-1 contains 130 Bcf of proven reserves and at least 3 Tcf of total possible reserves.Downstream Developments Pipelines In November 2005, talks over building a pipeline linking the Camisea project in Peru with northern Chile stalled over a maritime border dispute between the two countries. If talks continue, the project could present an alternative to the aforementioned LNG trading scheme between the two countries. Currently, Chile sources most of its natural gas imports from Argentina , but gas shortages in Argentina have caused several supply disruptions in recent years. The project would depend upon the availability of surplus gas from Camisea, which has already contracted large volumes of future production to domestic needs and LNG export plans. Camisea's operators, though, have stated that there will be enough excess supply for both an LNG terminal and an export pipeline. |
Exploration and
Production Camisea 11 Tcf The Camisea project consists of several natural gas fields located in the Ucayali basin of southeastern Peru, principally in Block 88 along the Camisea River. Analysts estimated that Block 88 contains 11 Tcf of proven plus probable natural gas reserves and 482 million barrels of associated natural gas liquids (NGLs). An international consortium led by Hunt Oil has developed the upstream portion of Camisea, with production beginning in August 2004. The initial production capacity at Camisea was 450 million cubic feet per day (Mmcf/d) of natural gas and 34,000 bbl/d of NGL. However, output capacity is expected to increase once drilling begins (May 2006) on Camisea’s Block 56, adjacent to Block 88. Transportadora de Gas del Peru (TGP), a consortium led by Techint, constructed and now operates parallel natural gas and NGL pipelines that carry Camisea production to Lima and to a fractionation plant in Paracas. In March 2006, the Camisea pipeline ruptured for the fifth time since start-up in August 2004. The latest rupture occurred a week after E-Tech International issued a report warning of additional leaks and spills due to quality construction issues of the pipeline. A Peruvian regulatory committee fined TGP $915,000 for the previous four spills. The Camisea project provides natural gas for domestic consumption; however, natural gas production from the Camisea project will eventually exceed domestic demand, so project sponsors would like to export any excess production. Hunt Oil leads the Peru LNG consortium, which broke ground in January 2006 on a liquefied natural gas (LNG) export terminal at Pampa Melchorita, 105 miles south of Lima. The Peru LNG facility will have an operating capacity of 4.2 million tons per year, with most of the production destined for the Western United States and Mexico. Peru LNG plans to build a pipeline to feed natural gas from existing natural gas pipelines to the LNG export terminal. Construction of the pipeline is expected to start in the latter half of 2006 and to be completed as early as 2008, with first exports leaving the terminal in 2009. Peru LNG has also held discussions with ENAP, Chile's state-owned oil company, about exporting LNG to that country. Even though the countries share a land border, trading natural gas via LNG could be more cost-effective than the construction of a natural gas pipeline. Both countries already have plans to build the necessary LNG infrastructure. LNG Besides the Peru LNG project, there have been talks about a potential LNG partnership with Bolivia. That country has the second-largest natural gas reserves in Latin America, but it lacks the coastal access necessary to pursue LNG exports. One proposal under consideration would connect the Margarita gas fields in southern Bolivia to the Peruvian port of Ilo. However, the economic and political feasibility of this proposal is in doubt, and there are no concrete plans to date. For more information on the natural gas sector in Bolivia, please see the Bolivia Country Analysis Brief. |
Gas produced from the
Greater
Camisea fields 2005 HOUSTON, Mar. 3 2005 Peru LNG SRL—owned by Hunt Oil Co., Dallas, and SK Corp. of South Korea—has signed agreements to purchase 620 MMcfd of natural gas over 18 years from the Greater Camisea fields consortium in Peru. Peru LNG will use the gas in a planned $1 billion liquefaction plant it will build at Pampa Melchorita near Cañete, 169 km south of Lima on Peru's Pacific coast. The LNG plant will have an initial capacity of 4.4 million tonnes/year. Land for the plant has been purchased, Hunt said. Gas produced from the Greater Camisea fields, primarily from Block 56, will be liquefied and shipped to regasification facilities to be built by LNG purchasers, including Belgium's Tractebel Electricity & Gas International, which would regasify it in Mexico (OGJ Online, Oct. 2, 2003). Peru LNG, currently in advanced negotiations with potential buyers, said it anticipates timely decisions. Peru LNG will spend $800 million for additional wells, pipelines, and other facilities associated with the project. Discussions are under way with Transportadora de Gas del Peru for pipeline transportation from the upstream license holders to the LNG plant. The Greater Camisea license holders are Pluspetrol Peru SA, Hunt Oil Co. of Peru, SK Corp., Sonatrach Peru Corp. SAC, and Tecpetrol del Peru SAC. |