BMI View: While the Peruvian government is trying to garner investor interest in the country's upstream potential, we believe that lack of below-ground prospectivity, a history of strong environmental opposition and a highly competitive regional market will be the key factors diminishing the attractiveness of the country's oil and gas industry over the coming years.
|Crude, NGPL & other liquids prod, 000b/d||170.5||175.0||178.3||182.5||186.7||191.1||195.1|
|Refined products production & ethanol, 000b/d||200.0||202.0||203.0||203.0||203.0||213.1||221.7|
|Refined products consumption & ethanol, 000b/d||237.8||250.9||269.1||296.8||342.8||425.1||575.9|
|Dry natural gas production, bcm||12.2||12.7||13.2||13.7||14.3||14.9||15.4|
|Dry natural gas consumption, bcm||5.9||6.2||6.6||7.0||7.4||7.8||8.3|
The main developments in the Peruvian oil and gas sector:
In July 2015, Peruvian President Ollanta Humala confirmed that Gasoducto Sur Peruano's gas pipeline will supply cheap and clean fuel to up to 13 cities by 2017. The president stated that gas distribution concessions in six high Andean regions and the Ucayali region are expected to be awarded by end-2015. The pipeline is currently under construction; it will serve cities including Abancay, Andahuaylas, Huancavelica, Jauja, Cusco and Pucallpa.
In April 2015, PetroPeru launched the bidding process for Peru's biggest oil block AB-1. Despite the initial interest expressed from Pluspetrol , Perenco Ltd and Pacific Rubiales Energy, none of the companies bid in the auction, which ended in early August 2015. According to media reports, PeruPetro is now considering negotiating temporary (2 years) or definitive contracts (30 years) directly with potential operators. As a potential alternative, Peru's energy minister Rosa Maria Ortiz raised a possibility that state-owned PetroPeru could operate the block.
In June 2015, PeruPetro advanced a bidding round for seven blocks in Peru's vast Amazon region. Two more rounds are expected in Q415, one for six offshore blocks and the second for eight additional jungle blocks. 'We are very optimistic. While the market is tough right now, we are going to offer blocks that present good opportunities,' PeruPetro President Luis Ortigas said. Argentina's Tecpetrol, Spain's Repsol and the US' Chesapeake Energy have registered to bid on the jungle blocks by the June 25 deadline. The results will be announced by the end of August 2015.
In June 2015, Peru's President Ollanta Humala and his Bolivian counterpart Evo Morales agreed to study a project that will allow landlocked Bolivia to export its natural gas to Asia from Peru's Pacific coas.. Humala is willing to let Bolivia link to a USD5bn Gasoducto Sur Peruano pipeline, which is now being built by Brazilian construction firm Odebrecht in southern Peru. The pipeline is scheduled to be completed in 2017.
Peru's state-run energy firm Petroperu plans to issue USD2.7bn in global bonds by the end of November 2015, according to company's President German Velasquez. The bonds, likely with a 30-year maturity, will be used to finance an expansion of the company's main refinery. French bank Societe Generale and Peruvian bank Cofide are the bookrunners on the planned transactions, which will allow the company to speed up work on its Talara refinery that is now 13% complete.
In April 2015, US-based oil and gas firm BPZ Energy failed to encounter commercial volumes of oil at its Albacora A-22D well on block Z-1 offshore Peru. The well was drilled to a measured depth of 4,184.9 metres. The well tested water with no oil shows from the three targeted zones, which are productive in the main part of the field.