Natural gas production starts in Peru

Dec. 27 (UPI) -- Spanish energy company Repsol said natural gas production started at a site in Peru that has the reserve equivalent of a quarter of the nation's demand.

Gas production started Wednesday at the Sagari field, located inside so-called Block 57 in the southern Cusco region of Peru.

"The start of production at Sagari will lead to a 25 percent increase in the block's total output," the Spanish company said in an emailed statement.

Starting in January, production will be the equivalent of around one fourth of Peru's total demand for natural gas.

Peru is recovering from a multibillion-dollar corruption scandal involving Odebrecht, Latin America's largest construction company. The case brought down Brazilian President Dilma Rousseff and reached into Peruvian politics.

The International Monetary Fund said the scandal is weighing on investor confidence in Peru, which as a nation is trying to cope with one of its worst landslides in history. Growth for Peru is expected to slow to about 2.7 percent for gross domestic product this year, and that's supported by a fiscal stimulus effort. Growth next year should be around 3.7 percent, fueled by reconstruction projects that were delayed by the Odebrecht scandal.

Commentary emailed from the Oxford Business Group said stimulus and the recovery from flooding and corporate graft could be net positive for Peru.

"Perhaps in some ways, both incidents helped accelerate development plans, particularly through the Reconstruction with Changes program, which has played a part in boosting investor confidence," said Jaime Pérez-Seoane de Zunzunegui, OBG's regional editor for the Americas.

Repsol holds a 53.9 percent stake in the Sagari field alongside Chinese partners. The field was discovered in 2012 and is located just east of the Andes mountain range. Repsol said it considers Sagari to be one of most prolific producers in the country.