Situation and Perspectives for the Energy Sector in Peru

Transcription

1 Business Network Forum 18th Meeting, Iquitos- Peru, 04 March 2008 Situation and Perspectives for the Energy Sector in Peru Carlos del Solar President and General Manager Hunt Oil Company of Peru 18 Th Meeting of the Energy Business Network (EBN) Iquitos, 4 March 2008

2 Peru: Basic Facts Area : 1 285,215 km2 (496,224 sq. miles) Geography and political division: Peru is divided in 3 regions: Coast, Andean Mountains and Amazon Rainforest. Politically, it is divided in 24 departments.

3 Peru: Basic Facts Population: 27 million people Urban Population: 72 % (Lima 33%) Rural Population: 28% Poverty: 44% Extreme Poverty: 21% GDP: US$ 109 billion GDP per capita: US$ 4000

4 Peru: Basic Facts The Highest Economic Growth since 1994 Economic Growth (Real GDP annual % change) Highest rate since Driven by Private Investment Private Investment (Annual % change) Source: INEI, MEF Source: BCRP. Forecast s: MEF

5 and Exports Peru: Basic Facts TRADE BALANCE ,004 5,286 8,934 8, Exports 6,955 7,026 7,714 9,091 12,809 17,368 23,800 27,956 Traditional products 4,804 4,730 5,369 6,356 9,199 12,950 18,374 21,493 Non traditional products 2,044 2,183 2,256 2,620 3,479 4,277 5,271 6,288 Others Imports 7,358 7,204 7,393 8,205 9,805 12,082 14,866 19,599 Consumer goods 1,494 1,635 1,754 1,841 1,995 2,308 2,611 3,191 Intermedial goods 3,611 3,551 3,740 4,340 5,364 6,600 7,987 10,416 Capital goods 2,114 1,921 1,842 1,974 2,361 3,064 4,145 5,885 Other goods (US$ Million)

6 Peru: Basic Facts Solid External Current Account Surplus Current Account Balance (% of GDP) Trade Balance (% of GDP) Source: BCRP. Forecast s: MEF. US$ Million

7 Peru: Basic Facts With a Substantial Reduction of Debt Burden and Public Debt Public Debt Sour ce: M EF % of GDP Record International Reserves Net International Reserves (US$ Million) 35,000 30,000 25,000 20,000 15,000 10,000 5, ,275 10,169 9,183 8,404 8,180 8,613 9,59810,194 12,63114,097 27,772 30, Source: BCRP. NIR Net Int. Position

8 Peru: Basic Facts Inflation under Control Inflation ( ) Source: INEI

9 Peru: Basic Facts Institutional Safeguards THE CONTRACT LAW Defined under Article 62 of the 1993 Constitution. Contracts between government agencies and private investors can only be amended by mutual agreement of the Parties. Neither Congress nor the Executive Power can modify such contracts. The Constitution guarantees equal treatment to domestic and foreign investment.

10 Requirements to Continue Attracting Investment State in which the rule of law prevails, principle of authority; and more involvement from the government. Economic, judicial and political stability. Clear, stable and predictable rules. Security and social peace. Autonomous regulatory and fiscal entities with qualified technical personnel. International Arbitration Peru: Basic Facts

11 Peru: Basic Facts Challenges to Private Investment Social Unrest Social Exclusion Effective Decentralization Permitting Processes Political Stability New Labor legislation

12 Current situation Energy in Peru

13 Demand of Energy Natural gas + Liquids 6.4% Hydroenergy 19.6% 2003 Commercial use of Energy (thousands of TJ/year) Coal 4.6% Natural Gas is becoming the source of choice for power generation due to preferential price for domestic use 2006 Commercial use of Energy (thousands of TJ/year) Total: 530 x 10³ TJ Petroleum 69.4% Natural gas + liquids 21.7% Coal 4.8% Hydroenergy 13.4% Petroleum 60.1% Total: 602 x 10³ TJ

14 Production and Proven Reserves Production and Proven Reserves of Commercial Energy 100% 50% 0% Production Reserves Source MEM,National Energy Petroleum Hydroenergy Natural gas Coal

15 Final Consumption of Energy By Product Coal and Derivates, 3.7% Electricity, 17.6% Hydrocarbons, 59.0% Solar Energy, 0.5% Vegetable fuels, 2.3% Firew ood, 17.0% Total : 498,121 TJ Source MINEM,National Energy Balance 2006 Transport, 32.8% By Economic Sector Agricultural, Agro-industrial and Fishing, 4.3% Industry and Mining, 28.1% Public and Commercial Res, 31.9% Non Energetic, 2.9% Total : 498,121 TJ Source MINEM,Nat ional Energy Balance 2006

16 Average Demand for Hydrocarbons Total Average Hydrocarbon Demand in the year 2007 Turbo 2% Gasolines 11% Others 2% Kerosene 1% Residuals 11% Diesel 2 36% LPG 14% Natural Gas 23% Total: 183 MBPD

17 Production of Liquid Hydrocarbons (Barrels per day) Liquid Hydrocarbons Petroleum Natural Gas Liquids

18 TCF Reserves and Demand for Natural Gas Natural Gas Reserves and Demand: Blocks 88, 56 and Total 15.4 TCF 2 Block 57 Total TCF 10.4 Block Local Demand* (20 years) 3.0 Block Export Project (PLNG) Reserves (2007) Demand * Hydrothermal Scenario: Generation with natural gas Thermoelectrics and Hydroelectrics

19 Sources of Electricity 2003 Average Natural Gas, 5.9% Liquids, 4.2% Natural Gas is the fastest growing source of power generation Coal, 4.2% May 2007 Hydro, 85.7% Natural Gas, 22.4% Liquids, 1.3% Source COES- DGE Coal, 3.1% Hydro, 73.2% Source COES- DGE

20 Installed Generation Capacity - MW Hydraulic Thermal

21 Power Demand and National Grid National Level Power Coverage (national average): 80% Rural areas coverage: 33% Consumption per capita: 932 kw.h/hab Installed Generation Capacity: Output: Number of Users: 7064 MW GW.h 4.3 MM Integrated National Grid Installed Generation Capacity: Production: 5788 MW GW.h Transmission Lines: 220kV: 138kV: 5809 km 3673 km

22 Electricity Demand (% Change)

23 Challenges ahead Changing the Energy Matrix

24 Energy Policy The Ministry of Energy and Mines energy policy states: Diversify the energy matrix to ensure reliable and opportune supply of energy. Promote private investment with clear and stable rules. Promote and implement power projects in rural and isolated areas. Promote efficiency in the use of energy. Promote the regional energy integration.

25 Energy Policy The Government and IADB are working on an Energy Policy to define the future Energy Matrix. The private sector must participate.

26 Long Term Objective Before Cam isea 6% 5% 33% Current Situation 56% 21% 4% The past 28% Objective 47% Coal Today 34% 33% Renewable Energy Petroleum Natural Gas The future 33%

27 Exploring and Producing Hydrocarbons Exploitation and Exploration Contracts Total New Contracts Exploitation and Exploration Contracts The record number of exploration projects is expected to bring US$ 3 billion in new investments Exploitation Exploration

28 MMUS$ 1500 Hydrocarbon Trade Balance Downstream investments Gas- LNG Project Liquids- LNG Project Líquids-Camisea Gas- Substitution Effect Camisea Starts LNG Project Starts (*) Production of Liquids associated to LNG Project starts last trimester 2008

29 Refineries Great need for investment to modernize refineries in order to reduce sulfur in fuels. US$ 1500 million needed for the upgrading and expansion of oil refineries (La Pampilla Repsol and Talara- Petroperu) and to expand Service Stations, Storage Stations and Transportation.

30 New Power Generation Projects Thermal: Six new projects: Approximated capacity: 1000 MW Estimated investment: US$ 380 million Operations are expected to start by the end of Hydraulic 3 projects: Approximated capacity: 441MW Estimated investment: US$ 434 million. Operations are expected to start by the end of 2011.

31 Electricity: Investment Opportunities Transmission Projects: Bidding processes for 3 transmission lines are being conducted by ProInversion: International connection grids: Ecuador (completed), Bolivia (project stage) Investments Generation, Transmission and Distribution: Generation Projects : US$ 680 Million Power Projects beyond 2008: US$ 760 Million Transmission Projects that will be put out for bids: US$ 835 Million Rural Electrification and Distribution Projects: US$ 590 Million Total: US$ 2865 Million

32 Conclusions Perú is a highly diverse country with many investment opportunities. Continuous economic and political stability for more than 15 years Continuous and significant economic growth for the past 9 years. Significant efforts are being made to promote energy projects for the domestic and World markets. Thus, in the coming years, it is expected that US$ 11.2 billion will be invested in the Peruvian energy sector.

33 Thank you