(EIA) — Increases in the production of natural gas and the opening of South America’s first liquefied natural gas (LNG) plant have enabled Peru to become a natural gas exporter despite rising domestic consumption. Peru has the potential to be
(EIA) — Increases in the production of natural gas and the opening of South America’s first liquefied natural gas (LNG) plant have enabled Peru to become a natural gas exporter despite rising domestic consumption. Peru has the potential to be a significant producer of both natural gas and petroleum due to its untapped reserves and rising investments by international companies.
New government policies aimed at attracting foreign investment may result in increased production for both export and domestic use. In addition, other policies to increase energy security by promoting energy efficiency and by using natural gas and hydropower resources for electricity generation have been implemented.
Despite a decline in crude oil production, Peru’s total oil liquids output has increased in recent years as a result of the rising production of natural gas liquids.
According to the Oil and Gas Journal, Peru had 582 million barrels of proven oil reserves in January 2012, up from 533 million barrels in January 2011. Peru has added approximately 50 million barrels of reserves in each of the past two years.
Much of Peru’s proven oil reserves are onshore, and the majority of these onshore reserves are in the Amazon region. Eleven important new hydrocarbon discoveries have occurred in just the past few years. In 2005, Peru’s first offshore oil discovery occurred in the San Pedro well in Block Z-2B, where light oil was found. The largest recent discoveries have been in the offshore Talara and onshore Maranon basins, where 1.4 billion and 970 million barrels, respectively, of recoverable oil have been discovered.
Oil companies have leased at least 41 percent of the Peruvian Amazon for oil and gas drilling and could soon hold 70 percent, including areas that are officially protected for the indigenous people, as more contracts are signed with foreign investors. The current exploration boom is the second to hit this region, following an initial surge of exploration in the 1970s and 1980s.
Oil production in Peru is run by foreign consortia, with the National Agency of Hydrocarbons (Perupetro) overseeing all exploration and production activities. The Ministry of Energy and Mines also participates in developing planning and policies for the sector. According to Perupetro, 75 percent of Peru’s crude oil output in 2011 was produced by three companies: Argentina’s Pluspetrol, Brazil’s Petrobras, and Peru’s Savia (formerly Petrotech). Due to an intense promotional campaign carried out by Perupetro in recent years, there are more than 50foreign oil companies currently engaged in oil exploration.As of August 2011, Perupetro had 82 hydrocarbons contracts in force; of these 20 pertain to production and 62 to exploration projects.
Not to be confused with Perupetro, Petroperu is a state-owned company founded in 1969, which is engaged in the production, transport, refining, and distribution of petroleum. Petroperu owns Peru’s pipelines and other transportation systems, four of its refineries, and fuel stations.
The bidding round held by Perupetro in late 2011 resulted in 11 new exploration and production contracts. Peru will offer as many as 30 exploration contracts for bidding in the second half of 2012, covering both offshore and Amazon areas.
Exploration and Production
According to EIA estimates, Peru produced 153,800 barrels per day (bbl/d) of total oil in 2011, down slightly from the 158,300 bbl/d produced in 2010, and an increase of 60 percent from the 99,600 bbl/d produced in 2000. According to Perupetro, of the 153,000 bbl/d produced in 2011, 46 percent was crude oil and 54 percent was natural gas liquids (NGL). Peru is a net oil importer of both crude and products as domestic petroleum consumption is increasing and reached 189,000 bbl/d in 2010. Much of Peru’s crude oil imports come from Ecuador.
While many of Peru’s existing oilfields are in decline, unexplored reserves of crude oil and natural gas liquids hold the potential for increased production. According to Perupetro, only 24 percent of Peru’s crude oil currently comes from onshore fields, while almost all NGL production comes from onshore fields. Business Monitor International’s January 2012 forecast projects that Peru’s oil production will more than double over the next five years, from 153,000 bbl/d in 2011 to 350,000 bbl/d in 2016. Perupetro expects oil production to exceed 500,000 bbl/d by 2021, driven by production from new discoveries.
Peru has only one crude oil pipeline, the 621-mile Norperuano, which includes two branches that run from the Ucayali and Maranon basins in the northeastern jungle to the export terminal at Bayovar on the Pacific coast. The pipeline is owned by state-run Petroperu, which is 