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Peru plans $ 1bn of investment in hydrocarbon exploration in five years

Peru can achieve US $ 1 billion of investment in hydrocarbons exploration in the next five years, with the extension of contract terms and shorter processing times, among other actions, the managing partner of Gas Energy Latin America said. Luis Fernández.

“Without making much effort to bring new companies but simply encouraging those who are here to invest, we calculate that there could be investments in the next five years of US $ 1,000 million in exploration alone,” he told Andina News Agency.

He said that the issue of deadlines for contracts is important, because investments in hydrocarbons are very long-term projects.

“The time to reach an oil discovery in Peru takes between five and nine years, then once it is crude, it is reasonable for the person who finds it to exploit it as long as possible to recover the investment and time,” he explained.

He indicated that currently the law contemplates a term of at least 20 years and a maximum of 30 years, and in the draft of a new Organic Hydrocarbons Law, a minimum period of 30 years is proposed with the possibility of renewing them for a similar period.

“In this way the country becomes more attractive for private investment, because the oil companies often make their plans for 30, 40 and 50 years,” he said.

“It is true that it is questioned that the term is extended for some contracts where there has been no investment, are special cases and must be reviewed or make some clarifications in the law,” he added.

He also pointed out that contract renewals must be conditioned to maintain levels of production and investment, details that are included in the bill.

Price perspectives. On the other hand, he indicated that the current price of a barrel of oil is priced between US $ 60 and US $ 70, but it is a value that responds to speculative factors due to the Syrian issue and the position of the president of the United States.

“At some point in the coming months should correct and be between US $ 50 and US $ 60, as noted by analysts, because it responds to the supply and demand of oil,” he said. In the last five years, the barrel of crude came to be quoted above US $ 110, at the beginning of 2016 it fell to averages of US $ 29, and since the end of 2017 exceeded US $ 60.

Investment costs. Fernandez said that the cost of exploration in hydrocarbons varies according to the geographical area and access to logistics.

“In the coast, the drilling of a well costs between US $ 5 million and US $ 10 million, in the sea in waters close to the coast can cost between US $ 15 million and US $ 20 million, but in deep waters for the area that was signed contract with Tullow Oil a well can cost between US $ 50 million and US $ 100 million, “he explained.

He indicated that the risk is that oil can not be found, and in the jungle it can cost US $ 100 million, as invested by Hunt Oil in lot 76 and did not find the expected results.

“When these investments are questioned, it should be reflected that they are large and give a lot of work, besides running the risk of not finding anything,” he said.

“So if there are companies interested in investing, we can not pass up the opportunity to do so, because if we are lucky they do find hydrocarbons and we all win,” he added.

On the other hand, Fernandez pointed out that hydrocarbon companies increasingly invest in the issue of environmental care and relationship with communities, and questioned that environmental permits only for exploration activities take more than five years, when in neighboring countries only It takes an average of 12 months.

Source: Gas & Energy Peru

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