Peru Oil and Gas Report Q4 2012
Business Monitor International, November 2012, Pages: 76
BMI View:
The outlook for Peru's energy sector is improving rapidly. Oil and natural gas production are forecast to rise at breakneck speed through to 2016, and sustain elevated production levels until the end of our 10-year forecast period. There is considerable upside potential to our forecasts as well, on the back of new production and discoveries, as well as an increasingly attractive business environment. The country is not risk-free, however, with relations with indigenous communities sitting firmly at the top of the list.
The main trends and developments we highlight in the Peruvian oil and gas sector are:
- 2013 will be Peru's last as an oil importer, with our forecasts suggesting imports of just 16,000 barrels per day (b/d). In 2014, the country will have a (theoretical) export capacity of approximately 37,400b/d, representing the beginning of a steep rise culminating in a peak of 128,780b/d in 2016. However, in order to sustain export levels above 100,000b/d through and beyond our forecast period ending in 2021, additional successful production will be required.
The fact that it is largely underexplored presents solid upside risks to its reserves forecast. Strong economic growth is expected to see consumption rise from 201,480b/d to 222,390b/d between 2012 and 2016.
- The outlook for the country’s gas sector is similarly bright. Gas production is forecast to jump from an estimated 9.3bn cubic metres (bcm) in 2012 to 13.0bcm in 2016. Gas consumption,
meanwhile, is expected to grow steadily, rising from 6.37bcm in 2012 to 8.19bcm by 2016. The gas export potential therefore increases to 4.81bcm, with scope for a further rise to 5.74bcm by 2021.
- By 2016, Peru’s oil and gas exports are set to yield some US$6.61bn as oil import volumes of an estimated 35,310b/d in 2012 are transformed into potential net exports of 128,780b/d in 2016.
Thereafter, the higher rate of oil consumption relative to production growth will see export revenues fall towards US$5.67bn by 2021, corresponding to a decline in oil exports. The country will remain a significant exporter of liquefied natural gas (LNG) throughout the forecast period.
We forecast that 2011 LNG exports of 1.55bcm will increase to 4.81bcm in 2016 and 5.74bcm in 2021.
- National oil company Petroperú had previously announced plans to list 20% of its stock on the Lima bourse in the second half of 2012, although at the time of writing no announcement had been made. The company had also announced a desire to resume oil production for the first time since the 1990s. Both of these initiatives are part of a larger goal to have the company much more closely resemble Brazil’s Petrobras and Colombia’s Ecopetrol, as well as to increase the overall level of investment in the oil industry.
- The beginning of production at Field 67 is a major driver to our production growth forecast. The field is scheduled to begin commercial production in 2013, and is operated by Perenco with Petrovietnam Exploration and Production Corporation (PVEP) maintaining a noncontrolling 50% stake. The field has 300mn barrels of oil in reserves, and will reach an estimated peak output of 60,000b/d in the next several years.
- The country's gas production is set to receive a boost as well, primarily on the back of a recent discovery made by Repsol and Petrobras in Block 57 at the Sagari well. Initial estimates for the field indicate up to 56bn cubic metres (bcm) of gas, and preliminary estimates indicate that the block may be capable of producing 11,000 barrels of oil equivalent per day (boe/d), along with 2,000 barrels of condensate. The discovery is significant, as the country's gas reserves are forecast to undergo a modest decrease, while production is expected to increase significantly. As a result, more finds like at Block 57 will be required in order to keep gas production sustainable well into the future.
- The Humala government is planning to auction off licences for two new pipelines by the end of 2012. The first will be a 207km ‘loop’ to transport natural gas from the interior to the coast,
while the second will be dedicated to bringing ethane from Pisco to serve as feedstock for a planned petrochemical centre in the south, which the government hopes to have developed by 2015. The government is seeking public-private partnership investments for the construction of the two pipelines.
- Enduring risks stem from the energy sector's troubled relationship with indigenous communities.
Underscoring this trend is the recent announcement that Canadian firm Talisman Energy is preparing to exit the country. Talisman cited unsatisfactory production potential in the blocks it holds, despite a discovery made in Block 64. Although the company denied that poor relations with indigenous communities were a factor in its decision to exit, those groups claimed that the Achuar people, who live on Block 64, had not given their consent to drilling.
At the time of writing we assume an OPEC basket oil price for 2012 of US$107.05/bbl, falling to US$99.10/bbl in 2013.
BMI Industry View 5
SWOT Analysis 7
Peru Oil & Gas SWOT 7
Global Energy Market Outlook 8
Oil: Getting Closer To Emerging Markets Inflection Point 8
Table: Oil Consumption Forecasts, 2010-2016 (’000b/d) 10
Table: Oil Production Forecasts, 2010-2016 (’000b/d) 12
Regional Energy Market Outlook 16
Peru Energy Market Overview 19
Table: Peru – Upstream Projects Database 21
Industry Forecast Scenario 22
Oil & Gas Reserves 22
Table: Peru Oil & Gas – Historical Data And Forecasts, 2009-2016 23
Table: Peru Oil & Gas – Long-Term Forecasts, 2014-2021 24
Oil Supply And Demand 26
Gas Supply And Demand 27
LNG 27
Refining And Oil Products Trade 28
Revenues/Import Costs 28
Oil & Gas Infrastructure 29
Oil Refineries 29
Table: Refineries In Peru 29
Oil Pipelines 30
LNG Terminals 30
Gas Pipelines 31
Regional and Country Risk/Reward Ratings 32
Table: Latin American Oil & Gas Risk/Reward Ratings 32
Table: Upstream Risk/Reward Ratings 34
Table: Downstream Risk/Reward Ratings 35
Peru Upstream Rating – Rewards 36
Peru Upstream Rating – Risks 37
Peru Downstream Rating – Overview 38
Competitive Landscape 39
Executive Summary 39
Table: Key Players In Peru Oil & Gas Sector 40
Overview/State Role 41
Licensing And Regulation 41
Government Policy 44
Licensing Rounds 45
Table: Key Upstream Players 47
Table: Key Downstream Players 47
Company Monitor 48
Petróleos Del Perú (Petroperú) 48
Repsol Peru 51
Sapet Peru/CNPC – Summary 53
Maple Gas – Summary 53
Pluspetrol – Summary 53
Hunt Oil – Summary 53
Perenco – Summary 54
SK Corporation – Summary 54
Petrobras – Summary 55
ConocoPhillips – Summary 55
Savia Perú – Summary 55
Talisman Energy – Summary 56
BPZ Energy/Shell – Summary 56
Others – Summary 57
Latin America – Regional Appendix 60
Table: Oil Consumption – Historical Data & Forecasts, 2009-2016 (’000b/d) 60
Table: Oil Consumption – Long-Term Forecasts, 2014-2021 (’000b/d) 61
Table: Oil Production – Historical Data & Forecasts, 2009-2016 (’000b/d) 61
Table: Oil Production – Long-Term Forecasts, 2014-2021 (’000b/d) 62
Table: Refining Capacity – Historical Data & Forecasts, 2009-2016 (’000b/d) 62
Table: Refining Capacity – Long-Term Forecasts, 2014-2021 (’000b/d) 63
Table: Gas Consumption – Historical Data & Forecasts, 2009-2016 (bcm) 63
Table: Gas Consumption – Long-Term Forecasts, 2014-2021 (bcm) 64
Table: Gas Production – Historical Data & Forecasts, 2009-2016 (bcm) 64
Table: Gas Production – Long-Term Forecasts, 2014-2021 (bcm) 65
Table: LNG Exports – Historical Data & Forecasts, 2009-2016 (bcm) 65
Table: LNG Exports – Long-Term Forecasts, 2014-2021 (bcm) 66
Methodology And Risks To Forecasts 67
Glossary Of Terms 68
Table: Glossary Of Terms 68
Oil And Gas Risk/Reward Ratings Methodology 70
Ratings Overview 70
Table: BMI’s Oil & Gas Business Environment Ratings – Structure 71
Indicators 72
Table: BMI’s Oil & Gas Upstream Ratings – Methodology 72
Table: BMI’s Oil & Gas Business Environment Downstream Ratings – Methodology 73
BMI Methodology 74
How We Generate Our Industry Forecasts 74
Energy Industry 74
Cross checks 75
Sources 75
Company Monitor
Petróleos Del Perú (Petroperú)
Repsol Peru
Sapet Peru/CNPC – Summary
Maple Gas – Summary
Pluspetrol – Summary
Hunt Oil – Summary
Perenco – Summary
SK Corporation – Summary
Petrobras – Summary
ConocoPhillips – Summary
Savia Perú – Summary
Talisman Energy – Summary
BPZ Energy/Shell – Summary
Others – Summary
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