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Peru weighs options to expand LNG exports

  • Märkte: Natural gas
  • 17.10.14

Peru is considering the installation of a new liquefaction plant on the southern coast or the addition of a second train to the existing Peru LNG facility to absorb rising natural gas production.

A new liquefaction plant could be built at a $15bn energy complex that the government is promoting on the southern coast, according to state-owned PetroPeru commercial manager Gustavo Navarro. The complex will include gas-fired power plants and petrochemical units.

Another option would be to add a second train at Peru LNG, which is operated by US firm Hunt Oil, partnered with Japan's Marubeni, South Korea's SK Energy and Shell.

The existing 4.4mn t/yr liquefaction plant, the sole LNG export facility in South America, has dispatched 223 shipments since it was launched in June 2010. The most recent cargo, the 138,000 m3 Hispania Spirit, left on 13 October for Spain.

Under a 15-year agreement with Mexico´s state-owned utility, the Federal Electricity Commission, Peru LNG is committed to supply a total of 67bn m3 of LNG through 2026.

Approximately 70pc of Peru LNG´s supply goes to Mexico, with the remaining 30pc sold on the spot market.

Any decision concerning a second LNG plant or a new train at Peru LNG is contingent upon the construction of a southern gas pipeline that was awarded on 30 June to a consortium of Brazil's Odebrecht and Spain's Enagas. The consortium says construction could be underway by the end of 2014 and the pipeline completed as early as 2017 if it is allowed to use permits that Odebrecht secured for an earlier pipeline project in the same area that never came to fruition.

The $4bn southern pipeline will run approximately 1,000km (621mi), starting from gas blocks in the jungle and running across the Andes mountains and down to the southern coastal cities of Ilo in Moquegua province and Mollendo in Arequipa province.

The line will initially transport gas from Camisea block 88, which has reserves of 9.5 trillion ft3 of gas.

Additional LNG output also depends on the development of more gas reserves. Expectations are particularly high for three areas that could hold a total of more than 20 trillion ft3 of reserves: block 57, operated by Spain's Repsol; block 58, which is being transferred from Brazil's state-controlled Petrobras to China´s state-run CNPC; and block 76, operated by Hunt Oil.

Repsol began initial production on block 57 in March, while exploration is underway on block 58. Hunt Oil is working on a $745mn seismic testing and drilling campaign on block 76.

The energy ministry estimates that block 57 holds 4.52 trillion ft3 of gas, block 58 holds 3.14 trillion ft3, and block 76 another 12.69 trillion ft3.

Peru currently produces around 34mn m3/d of gas.

A second train at Peru LNG would require the construction of a 950km pipeline along the coast that would connect the plant to the end of the southern pipeline in Mollendo. Hunt Oil was not available to comment on the possibility of adding a second train its Peruvian plant.

The government has already begun awarding projects for the energy complex. It awarded two power purchase agreements in November to two companies, for a total of 1,000MW.

Enersur, a subsidiary of French utility GDF Suez, will build one plant, while Samay I, a branch of Israel's IC Power, will build the other. PetroPeru also has a longstanding agreement with Brazilian petrochemical giant Braskem to consider a joint petrochemical complex.

lc/pg

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