Peru’s Camisea Gas Field to Feed Power and Petrochem Projects

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Researched by Industrial Info Resources (Sugar Land, Texas). With the inauguration of Peru’s first CCGT (combined cycle gas turbine) power generation plant, the international power utility Endesa becomes the leading consumer of gas from Peru’s Camisea field. The 492-megawatt (MW) plant’s opening was attended by the country’s President Alan Garcia, who thanked Endesa (NYSE:ELE) (Madrid, Spain) for their confidence “at an especially difficult time for Latin America and when uncertainty in the region is rife.”

Construction of the $135 million plant took two years and makes Endesa the largest investor in modernizing the country’s electrical power sector. Chairman of the company, Manuel Pizzaro said that the plant had cost a great deal of effort and money and also gave them a great deal of hope. “We have confidence in Peru and will continue to invest here,” he said. The company has had operations in Peru since 1994 and has 10% of its Latin American assets in the country.

Through Enersis (NYSE:ENI) (Santiago, Chile), Endesa has a controlling stake in Edegel with an installed capacity of 1,124 megawatts. The merger and takeover of Etvensa by Edegel in June this year created a more balanced power portfolio of 51% hydro-sourced power and 49% thermal-sourced. This reduced the volatility of revenues caused by variations in rainfall. Endesa also has a controlling stake in the 143 MW generating company Piura. With Enersis, it holds a 60% stake in Edelnor, which distributes electricity to 925 customers in the north of the capital Lima.

Another potential customer for Camisea gas is Brazilian energy major Petrobras (NYSE:PBR) (Rio de Janeiro, Brazil), which is studying a possible $800 million investment in an ammonia and urea production plant with a gas feed from the gas field. Although a feasibility study is still to be undertaken, the plant would probably be constructed on Peru’s south coast to facilitate exports. The environmental vulnerability of the Camisea fields in the interior of the country made a site near the gas source impractical said Gustavo Navarro of Peru’s general directorate of hydrocarbons. The capacity of the proposed plant had not yet been decided, but it would be enough to supply the domestic market and generate a surplus for export, he said.

He added that a recent revision of the contract with the upstream consortium of the Camisea gas project assured a very attractive natural gas price for a number of years to come. This followed potential investors in the petrochemical sector saying that they would need a more attractive price for natural gas before making project decisions.

There is the potential for Petrobras to invest up to $3.5 billion in the country. In September, the company signed a MoU with the state’s Petroperu for the study of petroleum and gas-related investments. Through a subsidiary, Petrobras pumps oil in an old field in the north of the country and has exploration and production contracts in several blocks in the country’s Amazon jungle.

On a visit to Sao Paolo after the power station launch, President Garcia asked Brazilian industry executives to invest in Peruvian hydropower projects to replace the volatile Bolivian gas supply feed to Brazil’s power generation sector.

For related news item see June 3, 2005 – Mexico to Tender for LNG Imports and Terminal with Peru Leading gas Supply Contender

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