Offshore licensing, land exploration set in Peru

Peru is preparing to call bid rounds by yearend 1998 for 13 blocks of nearly 1 million acres each from Tumbes near the border with Ecuador to Pisco about 130 miles south of Lima. The 400,000 ha offshore blocks cover parts of the Talara, Trujillo, Salaverry, Lima, and Pisco offshore basins (see map, OGJ, Mar. 30, 1992, p. 77). The country will also offer two onshore blocks, one adjacent to Block XIII on the north coast where Olympic reported a gas find, and the other at Pisco.

Aug. 3, 1998

5 min read

Peru is preparing to call bid rounds by yearend 1998 for 13 blocks of nearly 1 million acres each from Tumbes near the border with Ecuador to Pisco about 130 miles south of Lima.

The 400,000 ha offshore blocks cover parts of the Talara, Trujillo, Salaverry, Lima, and Pisco offshore basins (see map, OGJ, Mar. 30, 1992, p. 77).

The country will also offer two onshore blocks, one adjacent to Block XIII on the north coast where Olympic reported a gas find, and the other at Pisco.

Offshore expectations

Perupetro SA, the oil regulatory company, hopes to promote a strong offshore search in line with the successful international trend to develop deepwater oil and gas fields after sparse results onshore.

A large number of international companies is exploring in Peru, but there have been no major finds since Royal Dutch/Shell Group found world class Camisea natural gas and condensate fields in the mid-1980s.

Perupetro plans to hold a road show by September to promote the offshore blocks in Houston, Calgary, and perhaps London. It expects to call the bid rounds in November-December and have the new contracts in force by next April.

Fernando Zuniga, a former Petroperu president and geologist with long experience in the north coast fields, is taking responsibility for disseminating information on the oil potential of Peru's offshore blocks.

The campaign is backed by a 1,700 km seismic survey made in 1993 between Tumbes and Pisco by Ribiana Inc., Katy, Tex., and Simon Petroleum Technology, U.K.

Ribiana and Simon, which made the survey for Petroperu, then the state oil company, also have licensing agreements to sell the results of their seismic survey to private companies through August 1999.

No drilling has occurred at Pisco, but Perupetro said seismic information is available on the area.

Several companies have explored north coast offshore blocks in the past, but Petrotech Peruana Inc. is so far the only producer, with an average output of 17,320 b/d of crude oil last year.

Meanwhile, Repsol is exploring Block Z-29 in the Salaverry basin in association with partners YPF of Argentina 25%, Brasoil Sucursal del Peru 20%, and Ranger Oil Ltd., Calgary, 15%. Repsol, which holds 40% of that contract, is also negotiating an agreement for offshore Block Z-4.

Two companies, Occidental Peruana Inc. and Perez Companc, Buenos Aires, joined the offshore search early this year with contracts for Blocks Z-3 and Z-1, respectively. The only other bidders for the blocks were Ranger and Agip SpA.

Maranon activity

Repsol, meanwhile, signed its first Peruvian jungle exploration license on June 30 for 1.76 million acre Block 33 in the Maranon basin. Part of the North Peruvian pipeline traverses the block.

In the jungle, Repsol this year won an exploration and development license in a recent bid round in Block 35 in the Ucayali basin (see map, OGJ, July 6, 1998, p. 84). Perez Companc won neighboring Block 34. The companies are discussing joint operations but have yet to sign an agreement.

On Block 33, Repsol in a seven-year program will reprocess and reinterpret 600 km of existing 2D seismic lines and acquire, process, and interpret another 250 km. It will also drill five exploration wells unless it decides early results do not justify completing the seven year period. Perupetro estimates the program will cost around $45 million.

The area, which includes former Block 4, was explored in the early 1970s by two U.S. companies, Oceanic Petroleum and El Paso Natural Gas Co. Block 4 was also most recently explored by Occidental Peruana, which drilled a dry hole in partnership with Ranger and returned the block to Perupetro.

Repsol has contracted to pay royalties, if and when it produces oil, ranging from 18.5% at the lowest factor up to a maximum of 45%, depending on production and prices. In the case of gas and condensate production the royalties would range from 18.5-38%.

The block's location along the pipeline gives the company quick access to transport to the northern coast should it make an oil discovery. The North Peruvian pipeline pumps an average 80,000 b/d from Occidental and Pluspetrol's northern jungle oilfields. Total capacity is 200,000 b/d.

Repsol is the operator and main shareholder in the consortium that owns a 60% stake in the ex-Petroperu La Pampilla oil refinery and owns and operates gas bottling and distributors and a network of service stations.

Ucayali blocks let

Perupetro selected Perez Companc and Repsol to explore and develop Ucayali basin Blocks 34 and 35, respectively.

Perupetro promoted the blocks in a private selection process announced last December. The companies put in their offers on Apr. 3 and Perupetro's board confirmed the winners on Apr. 17.

Other companies that had qualified to compete included Arco, ENI, and Talisman. Phillips Petroleum Co. qualified but did not make an offer.

The blocks are in Peru's southern central jungle north of the Camisea natural gas fields. Block 34 has an area of 2.78 million acres, and Block 35 covers 2.62 million acres.

The contracts allow 30 years to develop oil and 40 years for gas. Each company must reprocess existing seismic information and acquire, process, and interpret a minimum 500 km of 2D seismic lines during the first two years. They will each subsequently drill one exploration well a year for five years. Perupetro estimates the cost of each program at $37 million.

This is Perez Companc's first Peruvian jungle contract. The company operates former Petroperu Block X oil fields on the northern coast and in January won a competition for an exploration and production contract in Block XVI east of Block X. In the same month, Perez Companc signed up with Perupetro to explore offshore Block Z-1, which also neighbors Block X.