Peru’s LNG Sector – An Overview
Center for Latin American IssuesGeorge Washington University
Juan M. CayoViceminister of Energy of Peru
Washington DC, May 12th 2005 54
Center for Latin American IssuesGeorge Washington University
Peru’s LNG Sector – An Overview
Juan M. CayoViceminister of Energy of Peru
Washington DC, May 12th 2005
1. Introduction – Camisea 2. Camisea and its impact on the Peruvian
Economy3. LNG Project: What is it and what does it
require?4. Concluding remarks
INDEX
Introduction
What’s the Camisea Project?
1. Exploitation of Block 88
2. Transport of Natural Gas and NGL from Camisea to the Coast
3. Natural Gas Distribution in Lima
ECUADORCOLOMBIA
BRASIL
BO
LIV
IA
CHILE
LimaLima
PERU
Lago Titicaca
GASGAS PIPELINEPIPELINE
LIQUIDS PIPELINELIQUIDS PIPELINE
CRIOGENIC PLANT
BREAKINGPLANT
GAS
LIQUIDS
CAMISEACAMISEA
LNG PLANTKm 169
Pisco
Location of the Camisea Project
Investment in Camisea (MMUS$)
Upstream 757Transport 830Distribution 60Total 1.647
The Basic Camisea Project started commercialoperation on August 5th, 2004
Camisea and its impact on thePeruvian Economy
Comparison of Reserves and Energy Commercial Output
Reservas Comerciales
52.60%
27.20%
8.50%
7.70%
4.00%
0% 10% 20% 30% 40% 50% 60%
Gas+Cond.
Hidroenergía
Petróleo
Carbón
Uranio
Producción Comercial
19.00%
21.40%
59.40%
0.10%
0.00%
0% 20% 40% 60% 80%
Gas+Cond.
Hidroenergía
Petróleo
Carbón
Uranio
Evolution of Proved Reserves of Crude Oil: 1980 - 2003 (MMBls)
0
100
200
300
400
500
600
700
800
900
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002
Reservas Probadasde Petróleo Crudo
MMBls
Evolution of Proved Reserves of Natural Gas: 1980 – 2003 (TCFs)*
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002
Reservas Probadasde Gas Natural
MMMPC
*/ Block 56 not included because contract was signed in 2004
Liquid Hydrocarbons Output:1980 - 2004 (MBPD)
0
50
100
150
200
250
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004
Producción Fiscalizadade Hidrocarburos Líquidos
MBPD
Natural Gas Output:1994 - 2004 (MMCFD)
0
10
20
30
40
50
60
70
80
90
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Producción Fiscalizadade Gas Natural
MMPCD
Peru: A Country in Deficit (pre-Camisea)
Domestic Production of Crude Oil:83 thousand barrels per day
Domestic Demand of Oil derivates143 thousand barrels per day
Deficit ? 60 thousand barrels per day
At current prices (50 US$/Bl), this is equivalentto US$ 3,0 millions per day of trade deficit.
Trade Balance of Hydrocarbons: 1981 - 2004 (MBPD)
-125
-100
-75
-50
-25
0
25
50
75
100
125
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004
Exportaciones
Importaciones
Balanza Comercial
MBPD
Trade Balance of Hydrocarbons: 1981 - 2002 (MMUSD)
-2000
-1500
-1000
-500
0
500
1000
1500
2000
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004
Exportaciones
Importaciones
Balanza Comercial
MM US$
• Camisea is producing 400 MMCFD but as thedomestic consumption is only 80 MMCFD, most of itsproduction is being reinjected to maintain the reservoirpressure.
• Camisea is producing 34,000 bpd of condensates. Half of that is gasoline for export and the difference isLiquefied Petroleum Gas (LPG) and a small amount ofgasoil.
• Royalties for 2005 are projected in US$ 130 million ofwhich US$ 65 million will be transferred as Canon toCusco (regional and local governments).
Camisea impact on Energy Matrix
Peru: A Country in Deficit (post-Camisea)
Domestic Production of Crude Oil + Condensates:83 thousand barrels per day +34 thousand barrels per day
Domestic Demand of Oil derivates143 thousand barrels per day
Deficit ? 60 thousand barrels per day26 thousand barrels per day
At current prices (50 US$/Bl), this is equivalentto US$ 1,3 million per day of trade deficit. It isless than half of last year deficit.
FiscalFiscal•• RoyaltiesRoyalties•• TaxesTaxes•• TariffsTariffs
SocialSocial•• CanonCanon•• TechnologyTechnology transfertransfer
andand knowknow-- howhow•• EmploymentEmployment
opportunitiesopportunities
Economic Impact of Camisea
MacroeconomicMacroeconomic•• ReductionReduction in in energyenergy
costscosts•• TradeTrade balancebalance•• Industrial Industrial
competitivenesscompetitiveness•• ForeignForeign investmentinvestment
EnvironmentalEnvironmental
•• EmissionsEmissions reductionreduction(CO(CO2 2 /SO/SO2 2 //NONOxx))
•• CleanClean fuelfuel
BenefitsBenefits
LNG Project: What is it and what does it require?
What are the stages of the LNG Project?
3. Construction of the LNG Plant and Port Facilities
1. Exploitation of Block 56
2. Pipeline expansion
Reference Price/ US Market
LNG
Transport:
$US 650 MM
Transport:
$US 650 MM
Regasification: $US 500 MM
Regasification: $US 500 MM
Liquifaction:
$US 1,100 MM
Liquifaction:
$US 1,100 MM
PiplineExpansion: $US 500 MM
PiplineExpansion: $US 500 MM
Block 56 development: $US 550 MM
Block 56 development: $US 550 MM
Chain value of LNG – From fields to final markets
LNG Requirements
• Reserves• External market• Social and environmental standards• Government support
20 km
BLOCK 58PETROBRAS (in process)
BLOCK 88
BLOCK 57Repsol-Burlington
CASHIRIARI
SAN MARTIN
BLOCK 56MIPAYA
Gas Fields
Wells
Towns
NUEVO MUNDO
MALVINAS
LA PERUANITAPAGORENI Camisea
Block 88 and adjacent Blocks
Total Gas Consumption for the next two decades
0
100
200
300
400
500
600
700
800
2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025
MMPCD
0.0
3.0
6.0
9.0
12.0
15.0
18.0
21.0
MM
m3/día
Uso Vehicular
Uso Residencial-Comercial
Uso Industrial
Uso para Generación Eléctrica -Escenario Hidrotérmico
Natural Gas Reserves in Peru
NATURAL GAS RESERVES IN PERU
TCF: 1012 cubic feet
South Jungle12,03,98,1Block 885,002,0 3,0Block 56
6,06,0Other areas
28,717,011,7Total
0,40,10,3Central Jungle5,35,00,4Northwest
Total Reserves
TCF
Probable and Posible
TCF
ProvedTCF
Zone
Demand Projections for the next 20 years (2005-2024)
3,09*TOTAL DOMESTIC MARKET
1,05Power Generation
2,04Industrial, Residential, Commercial &Vehicle uses
TCFDOMESTIC MARKET REQUIREMENTS hydrothermal scenario (2005-2024)
TCF: 1012 cubic feet
Demand Projection for Camisea Zone Gas
*/ Conservative scenario. In a more optimistic case this figure increases to 3,97 due to reliance on thermal generation growth only.
17,69,68,0Excess Reserves
3,1--3,1
Domestic Market Requirement Hydrothermal
Scenario (2005-2024)
20,79,611,1Reserves
Total Reserves
TCF
Probable & Posible
TCF
ProvedTCF
Total Camisea Zone
Reserves vs. Domestic Market Requirements (2005-2024)
TCF: 1012 cubic feet
? Time span considered: 20 years? Volume of gas considered: 600 MMcfd
Total Gas required in 20 years: 4,3 TCF
Gas Requirements for a LNG Project
13,39,63,7Excess Reserves
7,8--7,4
Domestic Market Requirement +
LNG Project(2005-2024)
20,79,611,1Reserves
Total Reserves
TCF
Probable & Posible
TCF
ProvedTCF
Total Camisea Zone
Reserves vs. Domestic + LNG Requirements (2005-2024)
0
10
20
30
0 5 10 15 20Pozos perforados para exploración
Gas
, T
CF
1980
2001
2020
Potential discoveries with Export Markets
Cashiriari
Pagoreni
Lote 76
San Martin (I y II)
6 Wells perforated? 5 Discoveries
? 83 % Success
Bolivia Case: Reserves growth
Fuente: YPFB Abril 2002
0
10
20
30
40
50
60
1997 1998 1999 2000 2001 2002
Año
TP
C
Signs contract
with Brazil
Committed investments in exploration till 2003: 1,676 MMUS$
Camisea’s External Market
Social and Environmental Standards
? The companies have to submit Environmental Impact Studies (EISs) to appraise the potential impact which the LNG Project would have on the environment.
? The companies participating in the LNG Project will have to implement EISs and corporate environmental and social policies based on complying with the national legislation in force and with international standards (WB, IDB).
? Peruvian Government will support the environmental policies of the investors through the GTCI network and the renewed environmental legislation.
? Our objective is to achieve sustainable development through the rational exploitation of our resources.
MINEM-DGAA
MINSA
DIGESA
INRENAPETT
REGIONAL GOVMENTS.
OSINERG
CONAM
MIDEFENSA
DICAPI
MINTRACO NAC. INST. OF CULTURE
CONAPA
GTCI
PERUPETRO
Camisea Public DEFENDERS
Economic Impact of LNG
2,1502,022
1,200
880
463
722
500
1,000
1,500
2,000
2,500
LNG Project Antamina Yanacocha
Investment
Exports per year
Condensates+ gas
MM
US
$
Peru would become net exporter after more than 20 years (from 2009 onwards)
Hydrocarbon’s trade deficit reversion
-1000
-600
-200
200
600
1000
2002 2004 2006 2008 2010 2012 2014 2016
Lìquidos (LNG)
Liquids-Camisea
Substitution effect of gas
LNG Project- Liquids
LNG Project - Gas
Start Camisea Start LNG Project
US
$ M
M
Concluding remarks: Why do we support the LNG Project?
?LNG Project is a national project (as Camisea)? Investments of US$ 2,150 million?New employment for 35,000 people (direct and
indirect)?New fiscal revenues?New resources for the regional and local govt’s?Hydrocarbons trade deficit reversion? Incentives for new exploration?To show the rest of the world that Peru can
develop megaprojects with highest standards?Peru can turn into a Hub in the Southern Pacific
EndEnd
ETHNICGROUP
MACHIGUENGA
