The new Peruvian government headed by President Valentin Paniagua signed Saturday the development and transportation contracts for the long-awaited Camisea natural gas project.
Energy and Mines Minister Carlos Herrera said several modifications had been made from the drafts by the previous government.
President Paniagua thanked the investors for being flexible in agreeing to the terms. He also said that the project would contribute towards Peru�s development and decentralization. He added that his government would propose a natural resource tax on gas production to promote development of Peru�s southeast region, especially Cuzco, the area where the Camisea fields are located.
A consortium led by Argentina�s Pluspetrol in partnership with US firm Hunt Oil Co. and South Korean company SK Corp., won Feb. 16 the contract to exploit the Camisea fields with a royalty of 37.24%, which remains unchanged.
Tecgas, a unit of the Techint Group, leads the consortium for transport and distribution of the gas and natural gas liquids in partnership with Hunt Oil, SK Corp., Algerian company Sonatrach, and Peru�s Gra�a y Montero.
The consortium bid $1.45 billion to construct and operate the pipeline. The companies have up to 44 months to start up operations but agreed to make every effort to begin commercial operations within 36 months.
Tecgas is holding talks with Colombia�s Promigas, in which Enron is a partner; and another company that has not been named for the distribution of natural gas in Lima and Callao. Spain�s Gas Natural withdrew from the consortium shortly before the bid was presented.
Camisea�s fields, discovered by Royal Dutch/Shell Group in the mid-1980s, have estimated natural gas reserves of 13 tcf of gas and 600 million bbl of condensate.
Herrera said that modifications in the final contract included adjusting the formulas for calculating the price of the gas in accordance with international oil prices, using a $1 reference price from the start-up of gas production rather than the date of the contract, which had been agreed originally.
The investors have also committed to give preference to using national goods, services, and labor when competitive during the development and construction of the Camisea project. Consumers in Cuzco will pay a special price of $1/MMbtu for gas delivered to customers using less than 10 MMcfd. In other areas, the price is $1 for electricity generation but higher for other purposes.