Phase II of Peru's Camisea Pipeline Project Taking Shape

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Researched by Industrial Info Resources (Sugar Land, Texas)--Construction on the second phase of the Camisea pipeline project, launched in July 2007 by Peru's Ministry of Energy, is progressing smoothly. The $3.8 billion liquefied natural gas (LNG) project is scheduled to go into operation in 2010 and export gas from Camisea block 56. The project is being handled by Peru LNG, a consortium formed by Hunt Oil Company (Dallas, Texas) (50%), SK Energy Company Limited (SEO:096770) (Seoul, South Korea) (30%) and the Repsol YPF (NYSE:REP) (Madrid, Spain) (20%). The project includes the construction of a natural gas pipeline, an LNG plant at Pampa Melchorita, marine export facilities and an ocean breakwater. For details, view related July 16, 2007, news article - Peru's New LNG Project.

In late August 2007, it was announced that SK Energy, a subsidiary of SK Group (Seoul), sold 10% of the 30% it originally held to Marubeni Corporation (OTC:MARUY) (Chuo, Osaka). Repsol has announced that it will start exporting LNG on the spot market between May and November 2010. Long-term sales are planned to begin in January 2011. For more details, view related, October 18, 2007, news article - SK Energy Sells 10% Stake in Peru LNG Project to Japanese Firm.

The new pipeline will start 131.1 miles from the existing Camisea pipeline and transport natural gas from reserves in the Cusco region to the cities of Cusco, Juliaca, Arequipa, Matarani and the Port of Ilo, near the Peru-Chile border. It will be 675 miles long and is expected to cost $1.35 billion, half of which will be invested by the companies participating in the project. The remaining 50% will be financed. The project is scheduled to be completed by the fourth quarter of 2012. The contract has not been awarded yet for the design, construction and operation. However, in May 2008, Kuntur Transportadora de Gas, a subsidiary of Energy Transfer Partners (NYSE:ETP) (Dallas), submitted an application to carry out the project. Kuntur is in talks with Brazil's Odebrecht, Colombia's Promigas (CLB:PMGO) and France's Suez (EPA:SZE) (Paris), to become partners in the project. The pipeline will also transport natural gas from Ayacucho to the new LNG plant in Pampa Melchorita. These processing and export facilities are situated 168 kilometers south of Lima, Peru, and will have a single train with a capacity of 4.4 million metric tons a year.

In 2000, a consortium formed by Pluspetrol (Lima, Peru), Repsol, Hunt Oil, the SK Group, Tecpetrol (Buenos Aires, Argentina) and Sonatrach (Hydra, Algeria) began extracting gas and natural gas liquids (NGL) from blocks 88 and 56 of the Camisea field in Cuzco. The first phase of the project was completed in August 2004 with the construction of two pipelines for the distribution of natural gas and NGL. Transportation through both pipelines was awarded to Transportadora de Gas de Peru (TGP) (Lima), which has contracted Compania Operadora de Gas Amazonas SAC (Lima, Peru) to operate and manage the maintenance operations of TGP's pipelines.

The 34-inch-diameter natural gas pipeline is 454.2 miles long and has a transportation capacity of about 285 million cubic feet per day. The NGL pipeline is 347.3 miles long and has a 50,000-barrel-per-day capacity. Both pipelines receive natural gas and NGL at the Malvinas gas processing plant near the gas field and connect to Lurin as well as an NGL processing plant in Pisco.

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