Pluspetrol's Benito: Peru's future lies in natural gas

Peru's petroleum future lies in natural gas, says the country manager for the company heading the upstream portion of the most important energy project in that country's history.

Norberto Benito is general manager of Pluspetrol Corp. Peru SA, the local subsidiary of Argentine independent Pluspetrol SA. The company leads a consortium operating the upstream portion of the Camisea gas megaproject, which entails developing 11 tcf of gas and 600 million bbl of associated liquids in southern jungle fields and delivering those resources to markets elsewhere in the country. Progress on Camisea was recently updated at Ingepet IV, Peru's triennial upstream oil and gas conference (OGJ Online, Nov. 8, 2002).

Benito speaks with a geologist's zeal that belies his accounting background.

"Peru's future is gas," he said. "Peru needs another discovery, one large enough to encourage more companies to invest in its oil and gas sector."

Although all indications are that the country's remaining undiscovered potential resource is gas-prone, ". . . there is not yet a gas culture in the country," Benito said.

He contends that more extensions of known gas accumulations will be found in Peru, which in turn will stimulate further development of the country's nascent gas pipeline network. That in turn, will help expedite development of downstream markets.

Benito echoed the comments of his boss, Pluspetrol Pres. Luis Alberto Rey, (OGJ Online, Nov. 6, 2002), in elaborating Pluspetrol's philosophy towards gas in Latin America: That discovering and confirming significant gas reserves will create markets for that gas rather than waiting for incremental growth in market demand to create the impetus to find more gas.

Such a philosophy emanates naturally from a company steeped in Argentina's long natural gas tradition. Benito cited Rey's references to the development of Argentina's gas sector from its beginnings 46 years ago, when gas demand was 1 million cu m/day, to the current demand level of 130 million cu m/day, adding, "He envisages that phenomenon might be duplicated in Peru. There is a lot of room for gas applications here."

Pluspetrol in Peru
Pluspetrol's focus for the near term is twofold: to maintain the maximum level of production in its two main Peruvian properties—Blocks 8 and 1AB—to ensure a steady cash flow; and to start up the Camisea project by August 2004.

Both efforts are on track. Pluspetrol is producing 40,000 b/d of oil from Block 1AB and 24,000 b/d from Block 8. And Camisea remains on schedule and continues to mark progress. In addition, Pluspetrol has an exploration permit for Block 12.

Again, Pluspetrol has imported an Argentine model—which it also employed in Bolivia—for its approach to Peruvian exploration and development.

"What we are trying to do is what we were successful at in Argentina and Bolivia: conduct exploration within producing areas and find more oil and gas in neighborhoods where we are."

On Block 1-AB this year, Pluspetrol drilled a successful exploration well and two development wells, Benito noted. The Carmen Este X-1 exploratory well is currently producing almost 4,000 b/d of oil. The Carmen 1502 development well was drilled thereafter, and the Carmen 1503 development well spudded in late July. In addition to this year's successful program of three wells, another four delineation-development wells are on tap in the Carmen area for next year.

"The Carmen Este X-1 has opened a very interesting development prospect for this area, following an interpretation of existing seismic studies," Benito said. "The crude oil (gravity) is around 22-23° API, and we have a team analyzing the development of all the Carmen area: how many wells can be drilled, and potential reserves we can incorporate, as these reserves had not been computed. The interpretation of existing seismic achieved its success."

Pluspetrol has another 3 years remaining on the exploration concession covering Block 1-AB, with an option to extend for a year and to drill another exploratory well, Benito noted.

"We are trying delineate drillable prospects there, but we have no firm commitments yet."

Pluspetrol is also looking at developing prospects near existing production on Block 8, such as the Trompeteros Sur pool that it found within the confines of Corrientes field on Block 8.

"It's possible that, according to how the studies work out, we will find something inside the contract area. If the prospects appear outside Block 8, however, we would need to negotiate another contract with (state agency) Perupetro," Benito said. "All we have today is the small areas around the wells, as we returned (subblock) 8X to Perupetro after completing three exploration periods. In 1AB, we kept the whole area."

Pluspetrol is struggling to maintain production in Block 1AB, for which it acquired a permit in 2001, because the current decline rate is 20%/year. Since acquiring the permit, the company has drilled six development wells, two each in Carmen, Jibarito, and Dorissa fields.

However, there remains hope in a new interpretation of the area's geology, contends Benito: "What we are seeing now is that the oil is being found in a different trend than that shown 10 years ago."

Capital outlays for the Peruvian unit this year include $42 million for Block 1AB and $25 million for Block 8.

"It costs us a great deal to make these investments, as we are involved in a much bigger project to develop the Camisea natural gas fields," Benito noted.

Camisea, the future
The costs and sheer magnitude of developing Camisea fields and infrastructure have Pluspetrol reluctant to venture into other projects in Peru beyond its current commitments.

"We have enough involvement in Peru already, and Camisea is our highest priority," Benito said.

Some future business opportunities in Peru to be considered include not only further exploration, but also buying production or developing gas-fired electric power, he said, adding, "But let's wait until 2004, when Camisea starts up."

Benito sees Camisea as providing "important leverage" for future gas prospects, especially if additional reserves found in the Camisea area to underpin a proposed LNG export project are developed.

"If projects (such as) LNG exports become real, more companies will be tempted to look for gas," he said.

"The same group of rocks (productive at Camisea) occurs elsewhere in Peru," he added, noting Repsol-YPF SA's current exploration efforts north of Camisea targeting the same trend.

Pluspetrol's role
Benito takes pride in his company's dogged efforts to remain independent, following the absorption of Argentine independents into larger companies (Astra Capsa by Repsol-YPF, Petrolera Argentina San Jorge SA by ChevronTexaco Corp. forerunner Chevron Corp.).

The company is family owned with no publicly traded stock and no plans for going public, he noted.

And he appreciates the flexibility of working for a smaller company in a world increasingly dominated by massive oil and gas companies: "It's like sailing a boat among tankers: You can turn around a lot faster, and the decision time is very short. Our top people are always available at any hour; if a decision is to be taken over the phone, it's taken."

Benito's education and training didn't prepare him for his current role, however.

"When I was at the university, I thought would have my own small accounting practice and just take local clients, that I would never be part of a multinational firm. Now I work for a family-owned company that has gone international."

Originally named to the post of corporate controller at Pluspetrol, Benito was not the most obvious choice to be a country manager focused on E&P and pipeline projects.

However, he had experience supervising a finance and administration committee in Buenos Aires that followed the Peruvian unit operations.

"I compensated for my lack of technical knowledge with a knowledge of company operations and of a lot of excellent people working here."

That personal knowledge translated into an advantage when the Peruvian country manager position opened up.

"Districts or countries are not fiefdoms for engineers or geologists," Benito said. "Times are changing. We want to integrate our people into a culture now."

Career highlights

Norberto M. Benito is general manager of Pluspetrol Peru Corp. SA, the Peruvian subsidiary of Pluspetrol SA, an Argentine independent oil and gas company based in Buenos Aires.

Employment history
Benito joined Pluspetrol in 1992 as administration manager in Buenos Aires. From 1995 until his current posting, he served as corporate controller, with responsibility also over information technology. He was named country manager for Peru in 2000.

Prior to joining Pluspetrol, Benito worked for 4 years for Swiss-Swedish engineering and construction giant ABB as administration and finance manager in Argentina.

Before that, he worked for PricewaterhouseCoopers LLC, serving first as staff accountant then later as senior manager in audit and advisory services to medium and small-size companies and foundations, among others. Although most of his tenure with PWC was in Argentina, he also had a tour of duty in London (1981-82) and briefer stints in Brazil, Ecuador, and Chile.

Benito has an accounting degree from the University of Buenos Aires (1970).

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