Peru Cuts Gas Reserves, CNPC Block On Hold

(Argus, 10.Apr.2019) — Peru’s natural gas reserves declined after the energy ministry reclassified the potential of Chinese state-owned CNPC’s block 58 from proven/probable reserves to contingent resources.

The ministry said the decision was based on the methodology used for the report, which classifies P2 reserves as those that will be available within a five-year horizon or by 2022.

CNPC had been expected to develop the central jungle block by 2021, but plans to build a pipeline to evacuate production have been on standby for more than two years.

CNPC did not respond to requests for comment.

The plan to develop an estimated 3.9 trillion cf of gas on the 340,133ha (1,313mi2) block hinges on construction of the southern gas pipeline, which would carry gas from the block and surrounding acreage to the coast.

The $7.3bn 30-year pipeline construction and maintenance contract was awarded in 2014 to a consortium headed by Brazil’s Odebrecht. The 1,1,00km (683mi) pipeline should have been finished this year, but it became ensnared in a corruption scandal involving Odebrecht and other Brazilian construction firms.

The contract for the project was annulled in January 2017 and Peru’s government has yet to decide on its future. It is reviewing three options, including the original route, but is not expected to make a decision until later this year. It would take at least another year to launch a public tender to award the project.

CNPC’s $2bn development of block 58 is not feasible without the midstream infrastructure. An existing pipeline that services adjacent blocks 58 and 88, which form the Camisea project run by Argentina’s Pluspetrol, and block 57, operated by Spain’s Repsol, is already at capacity.

Given the changes with block 58, the ministry reported 12.87 Tcf of proven gas reserves at the end of 2017, down by 19.9pc from the end of 2016.

Of the existing proven reserves, 96pc are found on blocks 56, 57 and 88, with 3pc on onshore blocks along the northern coast, and 1pc in the northern jungle.

Despite the reduced reserves, the government forecasts that production will rise from 1.3bn cf/d in 2019 to 1.45bn cf/d in 2022.

Gas production averaged 1.23bn cf/d in 2018, mainly from block 88 with 648.9mn cf/d, block 56 with another 356.3mn cf/d and block 57 with 166.8mn cf/d.

Most of Peru’s gas production is exported as LNG. The country is the only LNG exporter in South America.

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