South America: Peru

SOUTH AMERICA

Stuart Wilkinson, Contributing Editor

Peru

After beginning his third presidential term amidst a wave of protests and demands for his resignation, Alberto Fujimori confirmed from Tokyo in November that he had left the presidency. In June of this year, Alejandro Toledo was elected president. Improved fiscal management is expected from the new government.

A group led by Argentinian Techint secured a 33-year concession to transport and distribute natural gas from the Camisea gas development project. Production is planned to begin in 2003. Development of these gas / condensate fields should end Peru’s dependence on oil, which comprises more than 50% of energy consumption. Camisea will allow Peru to eliminate its $600-million hydrocarbons deficit.

Exploration. Oil companies should invest about $70 million for exploration this year, compared to only $15 million last year. The government plans to sign six E&P contracts this year, including Block 22 (Occidental Petroleum) and Block 99 (Pérez Companc). State firm Perupetro has already signed contracts with Repsol-YPF for Block 27 and with Maple Gas for Block 31-E. Canadian, Australian and Mexican firms have expressed interest in four offshore blocks and 16 blocks in the jungle.

Over the last two years, exploration results have been disappointing. Perupetro signed just one E&P contract last year, with Advantage for jungle Block 87. But the country has now lined up 45 E&P contracts with investment commitments totaling $1 billion. The amount of 2-D seismic acquired last year fell 70%, to 836 mi. However, 3-D activity soared 216%, to 457 sq mi.

Drilling / development. As oil prices recovered from 1999 lows, wells drilled rebounded 71% last year. Footage drilled increased 102%, to more than 290,000. Offshore drilling more than doubled, to nine wells and 64,405 ft.

Argentina’s Pluspetrol is drilling a development well in jungle Block 8; Sapet of China is drilling Block 6/7; and Pérez Companc is in Block 10. Last January, Peru-based Petrotech sealed a wildcat in offshore Block Z-2B.

Production. Peruvian crude production slipped 7%, to 95,332 bpd. However, condensate output jumped 14% higher, to 3,885 bpd. Output has declined gradually in recent years, because new finds have failed to compensate for lower production in aging fields. Some areas – the northwest coast for example – have managed to increase production, helping to moderate the decline.

Pluspetrol was the largest producer. In August 2000, the company produced 62,581 bopd, including 26,408 bopd from Block 8 and 36,173 bopd from block 1AB. Other producers included Peru-based Petrotech (offshore Block Z-2B at 13,736 bopd), Pérez Companc (Block X at 12,424 bopd), and two Peruvian companies, Monterrico and Grana y Montero (756 bopd and 705 bopd, respectively).

On an annual basis, natural gas output averaged 160.22 MMcfd, up 4.5% from a year earlier.