Peru gas receives Brazilian cash boost

April 27, 2012 at 4:49 PM
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LIMA, April 27 (UPI) -- The Peruvian natural gas industry is in need of major investment and Brazil has come forward with cash injections aimed at moving the energy resource into the international markets.

Brazilian construction firm Odebrecht said a consortium of three Brazilian firms plans to spend up to $5 billion on building a pipeline and related infrastructures for bringing the gas into the market. Odebrecht's earlier plans called for a total investment of about $3 billion.

The final investment may be higher as the group includes energy multinational Petrobras and Sao Paulo petrochemical concern Braskem, industry data indicated.

The companies say they decided to increase total joint investment on exploration and future production as they saw increased potential for Peru's natural gas sector.

Petrobras says it expects to find 8 trillion-10 trillion cubic feet of natural gas in the Camisea fields currently under exploration and development.

Construction on the first part of a pipeline from the fields will start in June and be completed in 2014, Odebrecht's Peru General Manager Jorge Barata said. The final stretch of the pipeline to the southern Tacna region, 22 miles north of the Chilean border, is planned to be operational by 2020.

Barata said that as part of the first phase the pipeline will be extended to the mainly agricultural town of Quillabamba where a power plant will be built. At present Quillabamba's economy depends on coffee, cacao, tea and coca plantations but that is likely to change when the gas pipeline becomes operational.

Braskem has said it plans to build a major petrochemical plant in southern Peru to cater for local needs and export customers.

The petrochemical plant, due for completion in 2016, will feed off the Camisea oil and gas fields, officials said. Braskem says it aims to produce a range of petrochemicals, including explosives, at the plant.

Both Braskem and Petrobras say their projects are very much tied to the pipeline materializing as indicated.

Peruvian officials remain circumspect about Petrobras plans to export some of the gas extracted from the fields as liquefied natural gas shipments to Chile. Diplomatic relations between Chile and Peru remain uncertain as officials say there needs to be less mutual suspicion and more trust on both sides.

In addition to developing its oil and gas sector, Peru is keen to build an export-orientated power generation capacity, including giant hydroelectric plants.

Peru has eyes on Brazil and Chile as potential export markets, even as both Chile and Brazil pursue their ambitious and controversial hydroelectric projects. A similar plan to export Peruvian electricity to Ecuador is awaiting implementation several years after the commissioning of transmission lines connecting the countries.

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