Peru postpones Tractebel gas distribution contract

April 1, 2002
Peru's energy and mines ministry last week postponed the signing of a build, own, operate, and transfer (BOOT) contract until further notice with Belgium's Tractebel SA for the concession and distribution of natural gas from the Camisea project through pipelines in metropolitan Lima and Callao. Preliminary work on the project's transmission pipeline and development program, meanwhile, continues.


By an OGJ correspondent
LIMA, Apr. 1 -- Peru's energy and mines ministry postponed yesterday the signing of a build, own, operate, and transfer (BOOT) contract until further notice with Belgium's Tractebel SA that covers the concession for and distribution of natural gas from the Camisea project in metropolitan Lima and Callao. Preliminary work on the project's transmission pipeline and development program, meanwhile, continues.

Contract canceled
The ministry qualified Tractebel for the contract last month after reaching agreement with the consortium developing the Camisea transmission pipeline project—Transporte de Gas del Peru (TGP), headed by Argentine's Tecgas, a unit of Buenos Aires-based steel pipeline and construction firm Techint SA (OGJ Online, Mar. 21, 2002).

The Tractebel contract was to have been signed Mar. 22.The signing was postponed following allegations in the press that Tractebel—which owns and operates the Enersur coal-fueled power generator at Ilo on Peru's southern coast—had paid former President Alberto Fujimori a commission for approval of its license. Tractebel denies the allegation, but Congress has begun an investigation.

Luis Ortigas, the government's general coordinator for the Camisea project, said that should the allegation be confirmed, it would not delay the project, as another company could take Tractebel's place.

Camisea work continues
TGP will go ahead with preliminary work on the Camisea project's transmission pipelines.
Work on the Camisea natural gas project is on schedule according to Peru's energy and mines minister, Jaime Quijandria. The minister said the project should be ready in the first quarter of 2004, about 6 months ahead of the contract's deadline in September 2004.

Quijandria said preparation for drilling the first production well in San Martin field on Block 88 was beginning this month; drilling is expected to wrap up by August-September.

The minister said around 52,000 tonnes of equipment and materials had been barged so far on the Urubamba River to the Malvinas camp, where a dock has been built for unloading cargo. A consortium partner said about $100 million had been spent in the first year, mainly on studies, and the heavy expenses begin this year.

Quijandria estimates total costs for the project at $2.6-3.0 billion. About $1.6 billion is estimated for exploitation, drilling, and production activities, and $1.2-1.6 billion is estimated for transportation and distribution.

Work is also scheduled to begin for construction of the gas and liquids pipelines within the coming weeks. The environmental impact study for the pipelines has been approved, although, as was expected at the time, the consortium must meet additional conditions specified by the authorities.

TGP is negotiating with the InterAmerican Development Bank and the Andean Development Corp. to finance some $125 million towards construction of the gas and liquids pipelines.

TGP CEO Alejandro Segret said last week that the company expects to raise another $500 million from corporate bonds to be issued by Techint. Techint unit Tecgas is operator of the Camisea transport and distribution consortium. Citibank is preparing the preliminary information for the issue of the bonds.

Although figures sometimes vary, the Camisea fields have proven reserves of 13 tcf of natural gas and 600 million bbl of condensate, according to the ministry.