Peru’s Camisea natural gas development project came under scrutiny during outgoing President Alan Garcнa’s administration due to the alleged shortfall in domestic gas supply that would result from gas exports, in particular for thermoelectric generation.
Negotiations between the government and the Camisea consortium have kept the issue on the front burner as the two sides became locked in a discussion regarding export quotas, royalties and infrastructure expansion.
The issue is expected to remain in the limelight with this week’s announcement by president-elect Ollanta Humala, who takes office on July 28, that he appointed Carlos Herrera Descalzi to head the energy and mines ministry. Herrera held the same post under president Valentнn Paniagua’s transition government in 2000-01.
“Carlos Herrera has been very critical of the gas policy and Camisea,” Emilio Zъсiga, VP of Lima-based investment bank Latin Pacific Capital (LPC), told BNamericas. LPC participated as an advisor during Camisea’s concession process.
“I think he was probably selected because someone was needed to finally reach an agreement with the Camisea consortium,” said Zъсiga, adding “Camisea enjoys a legal foothold, but lacks political strength.”
The executive highlighted the urgent need of the parties to resolve the pending issues in light of talk of a possible gas supply crunch in 2012.
The challenge remains, however, of getting the consortium’s members to reach a consensus, in particular Hunt Oil and Repsol YPF (NYSE: REP) and their reticence to change, said Zъсiga.
LATEST DEVELOPMENT
The energy and mines ministry announced Thursday approval of hydrocarbons transporter TGP’s semi-detailed EIS for a US$589mn expansion dubbed Loop Sur in Cuzco region.
The company, which moves Camisea natural gas and NGLs to the coast, plans to install two 55km lines and a pumping station to increase capacity up to 1.27Bf3/d (36Mm3/d) and 120,000b/d from 530Mf3/d and 85,000b/d. Construction will take 18 months.
The expansion will allow continued development of projects including the Ica gas pipeline, petrochemicals plants in Marcona and new generation capacity planned by power producers Fйnix and Termochilca, the ministry said in a statement.
In related news, IDB approved the third transaction of a programmatic policy-based loan designed to help Peru develop a sustainable energy matrix.
The amount of this transaction, the third of four that make up the program, is US$25mn, the lender said in a statement.
The program aims to optimize natural gas and power resources, which could lead to a 50% reduction in the growth rate of natural gas used to generate power; surplus would be available for industrial and household use or exports, added the bank.
