Perupetro seeks exploration involvement

Monday, February 20, 2017

Faced with a three-year slump in upstream investment, Peru's hydrocarbons licensing authority Perupetro aims to get involved in exploration work to provide more information for new bid rounds.

The government hopes to push through a series of reforms in the second quarter to enable Perupetro to carry out seismic studies, lowering royalties, downsizing blocks and making contract terms more flexible, Perupetro president Rafael Zoeger told BNamericas.

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Some industry reforms can be achieved through ministerial decrees, while congress will have to vote on changes in the country's hydrocarbon law, he added.

"Perupetro is going to have to invest in information-gathering in order to spur future exploration," Zoeger said in an interview at Perupetro's office In Lima. "Congress has offered its full support to change these regulations to be able to attract more investment."

Perupetro also plans to start holding bidding rounds for a package of 54 exploration and production blocks - divided up into nine areas - in the second half of 2017, Zoeger said.

The agency increased the number of blocks from a previous estimate of 32 after companies pulled out of previous contracts and other areas were downsized. Exploration work has seen little progress due to spending cuts, social conflicts and permitting delays.

However, at least four major oil companies encouraged by US$50/b crude oil prices are looking to bid on jungle and offshore exploration properties, according to Zoeger.

"We have hopes of a big discovery in the Faja Plegada where Colombia has been successful," he said. "We also have hopes of an offshore discovery in deep water."

He added that China's CNPC has begun work on its development plan for block No. 58 in the Ucayali Basin after making a 3.9Tcf natural gas find there last year. Peru's GMP has also started work on development wells in north coastal block No. 4, while Repsol's latest exploration well came up dry in neighboring block No. 57, he said.

Canadian oil producer Pacific Exploration & Production has begun trucking about 6,000b/d of crude from block No. 192 in the Marañón Basin, as state oil company Petroperú's North Peruvian Oil Pipeline remained closed for a 12th month due to leaks, Zoeger said.

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The 858km duct was operating at a fifth of its 200,000b/d capacity when it was shut in February 2016. Repairs and maintenance will probably continue on the ageing pipeline for the rest of the year, according to the energy and mines ministry (MEM).

UK firm Perenco's block No. 67 has also been affected by the pipeline closure, but transport costs have stymied efforts to find other ways to ship crude out, Zoeger said. The closure has also limited output at northern jungle blocks operated by Spain's Cepsa and Pluspetrol of Argentina, he said.

The pipeline shutdown curbed Peru's crude production by 35.2% to 38,293b/d in December, according to Perupetro. Gas liquids production slid 2% to 99,915b/d, while natural gas output rose 9% to 1.45Bcf/d.