2013-02-20 05:34:27 - Recently published research from Business Monitor International, "Peru Oil & Gas Report Q1 2013", is now available at Fast Market Research
BMI View: Petroperu remains on course to resume upstream activity after decades on the sidelines. The timing is right for the state-owned company to regain a slice of domestic oil and gas production, as we forecast both will rise rapidly over the next few years, and will remain elevated through to the end of our forecast period in 2021. The underexplored nature of the energy sector, combined with an increasingly attractive business environment for foreign investment, creates further upside risk to our forecasts. It also supports our view that Peru will remain one of the most dynamic economics in Latin America over the forecast period. The country is not risk-free, however, with relations with indigenous communities sitting firmly at the
top of the list of concerns.
Full Report Details at
The main trends and developments we highlight in the Peruvian oil and gas sector are:
* 2013 will be Peru's last year 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 unexplored presents solid upside risks to its reserves forecast. Strong economic growth should help drive an increase in consumption from 201,480b/d to 226,840b/d between 2012 and 2017.
* 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 13.5bcm in 2017. Gas consumption, meanwhile, is expected to grow steadily, rising from 6.4bcm in 2012 to 8.6bcm by 2017. The gas export potential therefore increases to 4.81bcm, with scope for a further rise to 5.74bcm by 2021.
* By 2017, Peru's oil and gas exports are set to yield some US$6.34bn as oil import volumes of an estimated 35,310b/d in 2012 are transformed into potential net exports of 128,780b/d in 2016, although they begin to fall in 2017 to 119,333b/d. 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 4.9bcm in 2017 and 5.74bcm in 2021.
* Petroperu's President Humberto Campodonico has confirmed his company's intention to resume oil production for the first time since the 1990s, as well as to list 20% of its stock on the Lima bourse. With primary interests in the country's midstream and downstream segments, the addition of upstream exploration and production (E&P) activities will create a more vertically integrated oil and gas company. Due to the growing prospectivity of the country's energy sector, the timing is right for the state-owned company to regain a slice of the action.
* Perupetro, the private law state company in charge of the promotion of investments in hydrocarbons exploration and exploitation in Peru, has approved the delimitation of 22 blocks for hydrocarbons exploration and exploitation activities. The blocks on offer are located in the Maranon, Ucayali, Madre de Dios and Trujillo Basins. The Bidding Round will be launched in the last quarter of 2012. We expect the round to enjoy a strong response from investors, considering the country's continued growth potential and relatively favourable operating environment.
* 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 non-controlling 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 few 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 publicprivate partnership investments for the construction of the two pipelines.
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