Peru’s Humala May Curb Gas Exports to Mexico as Growth Boosts Local Demand
Peruvian President Ollanta Humala
Karel Navarro/Bloomberg
Ollanta Humala, Peruvian President, will consider cutting natural gas exports to Mexico as demand for local power plants and petrochemical projects surges with about 400 projects requiring more than 800 million cubic feet per day of gas.
Ollanta Humala, Peruvian President, will consider cutting natural gas exports to Mexico as demand for local power plants and petrochemical projects surges with about 400 projects requiring more than 800 million cubic feet per day of gas. Photographer: Karel Navarro/Bloomberg
Peruvian President Ollanta Humala will consider cutting natural gas exports to Mexico as demand from local power plants and petrochemical projects surges, according to the president of the state oil contracting agency.
The government will begin negotiations this month with a group that includes Hunt Oil Co. and Repsol YPF SA (REP) to persuade the companies to invest more in exploration, Aurelio Ochoa said. Peru’s industry has lined up about 400 projects requiring more than 800 million cubic feet per day of gas, he said.
“We need a more aggressive investment program,” Ochoa said today in an interview at his office in Lima. The government will curb exports “if there’s no other alternative,” he said, declining to give details on what the alternatives might be.
Energy and mining stocks plummeted after former army rebel Humala won the June 5 election on concern he would enact earlier pledges to rewrite oil and mining deals and halt gas exports. The government will seek investment in gas pipelines and petrochemical plants on the south coast, Humala said July 28.
A separate group including Hunt, Repsol, Argentina’s Pluspetrol SA and SK Group of South Korea began operating the $4 billion, 620 million-cubic-feet-a-day Peru LNG liquefied natural gas export plant last year.
Booming Demand
Repsol has bought Peru LNG’s entire output for 18 1/2 years, which it is marketing with Spain’s Gas Natural SDG SA. The company is shipping gas to Spain and will supply a gasification plant that Mitsui & Co., Samsung Heavy Industries Co. and Korea Gas Corp. are building in Mexico.
Hector Escalante, a spokesman at Mexico’s Energy Ministry, wasn’t immediately available to comment.
Natural gas for September delivery fell 8.2 cents, or 2 percent, to $3.942 per million British thermal units at 1:24 p.m. on the New York Mercantile Exchange. Gas has declined 11 percent this year.
Hunt Oil spokeswoman Jeanne Phillips and Peru LNG Chief Executive Officer Igor Salazar didn’t immediately respond to telephone calls or e-mails seeking comment. Daniel Guerra, spokesman for Camisea operator Pluspetrol, declined to comment when contacted by telephone.
Peru’s natural gas output jumped 20-fold to a record 1.1 billion cubic feet per day through the first half of 2011 after the $2 billion Camisea gas fields project started operating in 2004, according to Perupetro.
Demand for natural gas has boomed as Duke Energy Corp. (DUK), Israel Corp. and Endesa SA (ELE) expand gas-fired power plants and CF Industries Holdings Inc. (CF), Orica Ltd. (ORI) and Sigdo Koppers SA plan petrochemical plants, part of $10 billion in expected investment in the country’s energy industry, the Energy Ministry says.
Transportadora de Gas del Peru, a seven-company group whose partners include Pluspetrol, will finish an $850 million expansion of its Camisea pipeline by the end of 2012, while Camisea’s plan to increase output by 50 percent to 1.58 billion cubic feet a day will be ready by mid-2012, Guerra said in a May 18 interview.
Mexico’s Protexa SA de CV and Ashmore Energy International Ltd. shelved projects for lack of gas, Ochoa said.
“The local market isn’t being attended to,” Ochoa said. “Dozens of companies pull out of Pluspetrol’s bidding rounds. That tells you there isn’t enough gas to go around.”
To contact the reporter on this story: Alex Emery in Lima at aemery1@bloomberg.net
To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net.
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