Petroperu aims to meet half of domestic oil needs by 2015

Peru's state-owned Petroperu has taken the first steps toward becoming an oil producer again and aims to produce enough to meet at least half of domestic fuel demand by 2015.

Eric Watkins
Oil Diplomacy Editor

LOS ANGELES, Sept. 16 -- Peru's state-owned Petroleos del Peru (Petroperu) has taken the first steps toward becoming an oil producer again and aims to produce enough to meet at least half of domestic fuel demand by 2015, according to Petroperu Chief Executive Cesar Gutierrez.

"Diesel consumption will continue rising in Peru at an annual rate of 3.5%," Gutinerrez told Spanish news agency Efe, adding that demand will increase to 90,000 b/d over the next seven years from the current 60,000 b/d.

"If we want to maintain our share of the market, we must produce 45,000 b/d because today we have 50% of the market," Gutierrez said.

Currently, Petroperu must buy all the petroleum it refines from private firms. It currently buys about 30,000 b/d, with some 24,000 b/d produced domestically, while the remainder is imported.

Gutierrez said the remaining 30,000 b/d of fuel needed to meet domestic demand is supplied by Spain's Repsol-YPF SA, which imports a percentage of the crude it processes.

"We buy it all at the international price and so what we want to do is exploit our" fields, Gutierrez said.

To double domestic production, Gutierrez said Petroperu will have to modernize the Talara refinery at a cost of $1 billion and start production from the 12 blocks where petroleum exploration is taking place.

"We are in six preexploratory lots with (Brazil's) Petrobras and (Colombia's) Ecopetrol, and now we have won four offshore lots and two other lots on land," Gutierrez said.

According to Efe, Petroperu officially ended its petroleum exploration and production activities in 1996, when former President Alberto Fujimori's administration privatized the remaining lots the company had stakes in.

In 2006, when President Alan Garcia took office, he agreed to a request from Gutierrez to allow Petroperu to find private partners to fund petroleum and gas exploration and production, with the state firm holding minority stakes in fields.

Under this arrangement, Petroperu formed partnerships with Petrobras and Ecopetrol in 2006 to explore six blocks, and earlier this month came to agreements with Norway's Discovery, India's Reliance, China's CNPC and Argentina's Pluspetrol.

In July, Petroperu announced plans to invest some $50 million for an extension to the 852-km Norperuano crude oil pipeline that runs to the Pacific coast from fields in the northeastern jungle region (OGJ Online, July 24, 2008).

Contact Eric Watkins at hippalus@yahoo.com.

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