2012-09-06 08:11:11 - Peru Oil and Gas Report Q1 2012 - a new market research report on companiesandmarkets.com
BMI View: Perus burgeoning oil and gas sector is undergoing a period of transition after the election of President Ollanta Humala in June 2011. Although the industry watched Humalas successful campaign with a certain degree of trepidation because of his reputation as a leftist in the mould of Hugo Chavez, his move to the centre is a positive sign for the future of the countrys oil and gas sector. Moreover, we believe his political ties with local indigenous groups may lead to a breakthrough with regard to the Camisea gas controversy, which threatens to hamper the export of gas. There remains a risk that Humala will break to the left and implement policies that could undermine Perus attractiveness as an
investment destination, but we do not believe this is significant at this point in his young administration. As a result, we have retained our positive medium-term outlook for the sector.
- BMI forecasts that oil production will more than double over the coming five years, from a forecast 156,000 barrels per day (b/d) in 2011 to 350,000b/d in 2016, as investment in exploration and production (E&P) continues to rise. Over the same period strong economic growth is expected to see consumption rise from 194,000b/d to 222,000b/d. With the rate of production growth outpacing consumption, Peru will become a net exporter of oil in 2014.
- The countrys gas sector outlook is similarly bright. Gas production is forecast to jump from 7.5bn cubic metres (bcm) in 2011 to 13bcm in 2016. Gas consumption, meanwhile, is expected to grow modestly, rising from 5.95bcm in 2011 to nearly 8.2bcm by 2016. That will mean increasing volumes of gas available for export, and we forecast liquefied natural gas (LNG) exports rising to 4.8bcm by 2016.
- Investment and exploration success will be needed to maintain oil export volumes. We forecast oil production peaking at 350,000b/d in 2016 before slipping back to 335,000b/d by 2021. Consumption, however, is expected to continue rising, hitting 245,000b/d. That will see the countrys net export capacity fall from its peak of 127,000b/d in 2016 to around 90,000b/d in 2020. Oil exploration in Peru is at an early stage and further success over the coming years could very well improve the long-term outlook.
- Peru performs well in BMIs Business Environment Rating on the back of much-improved fiscal terms and a positive growth outlook. The country sits in third place in BMIs composite Business Environment Rating (BER), which combines upstream and downstream scores. This reflects the countrys third place in our updated upstream Business Environment ratings, behind Brazil and Colombia. Its gas resources, largely privatised oil sector, licensing regime and competitive landscape work in the countrys favour. Peru sits in the middle of BMIs downstream BER, reflecting its privatised refining segment and a relatively open but small market. It holds sixth place, behind Colombia, in the regional ratings. The price of this market report covers 4 quarterly reports on this sector. This quarterly report will be downloadable instantly as a PDF document, with the 3 remaining reports delivered at regular intervals throughout the year.
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