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Peru declares liquefied petroleum gas market in emergency
MarketWatch
LIMA
Petroleumworld.com 04 13 07
Peru's government has declared the liquefied petroleum gas or LPG market in emergency due to supply problems, Energy and Mines Minister Juan Valdivia said Thursday.
More than 50% of Peru's LPG is produced by Argentina's Pluspetrol Peru SA using gas from Camisea's block 88 in the southeastern jungle.
The Camisea project came onstream in mid-2004 and the government has made a concerted effort to create a domestic market for the natural gas and liquids coming from the project.
In February, LPG sales in Peru were 26,980 barrels a day, according to the Ministry of Energy and Mines Web site. The figure is 18% higher than it was in February 2006 and demand continues to rise.
" Increased demand will obligate us to import LPG for a brief period," said Valdivia at a signing ceremony for a new petroleum exploration contract.
" As you know, LPG consumption has been increasing in recent times. As of next month we will have a deficit of 1,000 barrels a day. By the first few months of next year, based on our calculations, we will have a deficit of 4,000 barrels a day," Valdivia told journalists.
The emergency decree will allow the government to use a special fund to compensate importers so that any increased costs are not incurred by the final consumer, said Valdivia.
According to the minister, the supply problem will last until mid-2008 as Pluspetrol is in the midst of expanding its production capacity in order to process gas and liquids coming from block 56, which lies adjacent to Camisea's block 88.
According to Valdivia, the company has said it will be in a position to meet national demand by July 2008.
Pluspetrol officials were not immediately available for comment but according to an official at state agency Perupetro, the plant will be expanded to produce 70,000 barrels a day of liquids, up from the current 35,000.
" The LPG production is expected to double as well and Peru will be able to export as opposed to importing," the official said.
Valdivia made the comments on the sidelines of a signing ceremony for a new petroleum exploration and production contract with the U.S.-based Vietnam American Exploration Company for offshore block Z-38.
Company President Arturo Morado said that the company will invest upwards of $37 million over the seven-year exploration period. Of that total, an initial $3 million to $4 million will be invested over the next 18 months to gather seismic data.
Peru currently has 19 production contracts and 44 exploration contracts with different oil and gas companies.
It is also in the process of carrying out a series of roadshows to promote 19 new blocks in different parts of Peru.
According to Perupetro president Daniel Saba, 25 companies including Royal Dutch Shell PLC have expressed firm interest and the winning bids will be announced in early July.
MarketWatch 12 04 07
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