China's state-run CNPC plans to move ahead on the $2bn development of block 58, which holds 3.9 trillion cf of natural gas reserves in Peru's southeastern jungle.
The company informed Peru's oil and gas agency, PeruPetro, on 20 May that it would begin drilling on the 340,133ha (1,313mi2) block later this year. Production should begin in 2023.
"This will be the largest investment in development of a new block in the coming years," PeruPetro president Rafael Zoeger said 23 May.
Zoeger said the gas would be used for power plants on the southern coast and potentially for a petrochemical plant. If the latter is not built, the gas could be exported, he said. That scenario would complement Peru LNG, South America´s sole liquefaction complex located at Pampa Melchorita on the central coast.
Zoeger said PeruPetro had appointed a staff member to work directly with CNPC to help guide it through all the necessary permits. He said while the company had set 2023 for its start-up date, he hopes that a proposal to streamline permits and other requirements will allow it to push up the date by two years to 2021. CNPC was unavailable for comment.
Block 58 is adjacent to the Camisea blocks, which hold close to 13 trillion cf of gas reserves, and block 57, operated by Spain's Repsol, which has just over 2 trillion cf in reserves. CNPC holds 46.2pc in block 57.
Block 57 produced an average of 157mn cf/d of gas in the first four months of this year, while Camisea block 88 produced 612mn cf/d, and block 56 another 384mn cf/d.
Zoeger said block 58 has two options to transport gas from the jungle to the coast. He said the company has been talking with the Camisea consortium, which is led by Argentina´s Pluspetrol, about using its pipeline infrastructure, but that option would only be necessary if the planned southern gas pipeline does not materialize.
Construction of the gas pipeline was awarded to a group headed by Brazilian construction company Odebrecht in June 2014. The Peruvian government annulled the contract in January 2017, after Odebrecht failed to close financing of $4bn for the construction phase because of a massive corruption scandal that it faces at home and in numerous other countries, including Peru.
The Peruvian government now hopes to offer a new contract for the 1,100km pipeline in first quarter 2018. Around 10pc of the pipeline has been built. The energy ministry claims the pipeline will be ready in 2021 if the contract is signed early next year.
CNPC separately announced an investment of $40mn to drill 60 production wells on block 10 that it operates on the country's northern coast. It drilled two wells in April. A CNPC subsidiary, Sapet, also operates nearby block 6/7.
CNPC is Peru's largest crude producer, averaging 10,266 b/d on block 10 and 2,684 b/d on block 6/7 in the first four months of the year, according to the energy ministry.
Total national output through April averaged 40,730 b/d.
