Peru natural gas players rally for reform

Debate over Peru's natural gas regulatory framework has been intensifying as stakeholders pitch what they see as needed reforms.

In recent days, Colombia's Promigas, which distributes gas in northern Peru, called into question the framework's ability to guarantee investment recovery with an adequate return.

The Bogotá-based group announced the suspension of investment and potential international arbitration.

For its part, hydrocarbons association SPH has criticized a legislative bill that would restrict the reach of social energy inclusion fund FISE, which has been the pillar of the government's gas massification program.

Gas users have also called for an update to the regulatory model.

"The regulation was designed to ensure the economic and financial viability of investments in gas infrastructure, and having achieved that objective to date, it is appropriate to review the regulatory framework considering the monopolistic nature of gas transportation and with the aim of promoting competitiveness for all users of this service," according to gas consumers association ACG.

The industry group represents Peru's main users of Camisea gas, including Alicorp, Cerámica Lima, Cerámica San Lorenzo, Sudamericana de Fibras, Owens Illinois, Backus, Unacem, Kallpa Generación, Orygen Perú and Fénix Power Perú.

ACG proposes four urgent reforms, beginning with flexible and adaptable contracting to match the seasonal and variable conditions of different consumers.

The group also calls for an end to what it deems "exorbitant" guaranteed tariffs or income for transport infrastructure whose investment has already been recovered.

Additional proposals include greater competition and transparency in bidding processes for gas transport and distribution concessions, and improved disclosure related to gas operations, as well as the maintenance of production and transport facilities.

Average offtake of Camisea gas in the first quarter of 2025 by sector in million cubic feet per day: power generators in dark blue, industry in yellow, vehicular natural gas in light blue, and residential and commercial in orange
(Source: Osinergmin)

Regulatory wrangling

Earlier this year, Transportadora de Gas del Perú (TGP), which moves Camisea gas to the coast from the Amazon, and Lima and Callao gas distribution concessionaire Cálidda filed unsuccessful appeals to overturn a resolution issued by energy and mining investment regulator Osinergmin.

The resolution established contracting reference factor (FRC) values for May 2025 through April 2029.

The FRC determines what percentage of the total natural gas that a power plant requires to generate at full capacity must be contracted in fixed-term contracts.

TGP argued that the FRC values were underestimated, weakening the economic and operational aspects of the gas transport system.

Cálidda claimed the values did not adequately reflect the importance of gas as a backup fuel to maintain power grid reliability.

Both companies said that Osinergmin included in the expected operational dispatch a considerable number of renewable energy projects whose probability of execution was low or uncertain.

(The original version of this content was written in English)