Business Network Forum. 18th Meeting, Iquitos- Peru, 04 March 2008 CAMISEA PROJECT. LNG Export Project. By Barbara Bruce General Manager, PERU LNG

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1 Business Network Forum 18th Meeting, Iquitos- Peru, 04 March 2008 CAMISEA PROJECT LNG Export Project By Barbara Bruce General Manager, PERU LNG

2 What is PERU LNG? PERU LNG is a Peruvian company founded in It has four partners that are world class actors in the energy industry:

3 Ecuador Colombia Brazil Project components: 1. Construction of a natural gas liquefaction plant, including a marine terminal, in Pampa Melchorita Pacific Ocean PERU LNG Pipeline TgP Pipeline Chile B o l i v i a 2. Construction of a 408 km 34-inch diameter pipeline from Chiquintirca in Ayacucho to the Melchorita plant 3. The Camisea Consortium to exploit Block 56 in order to supply PERU LNG with natural gas

4 Camp LNG Storage Marine Facilities Activated Carbon Absorber Gas Dehydration Unit Acid Gas Removal Unit (CO2) Torches General Services Gas Receiving Unit Refrigeration and Liquefaction Unit Electricity Generation Refrigerant storage Plant Capacity: 620 mmpcd Pampa Melchorita Plant

5 Pipeline layout Chiquintirca (Ayacucho) Pampa Melchorita Length: 408 Km Diameter: 34 PERU LNG CAMISEA

6 Schedule First LNG shipment in Stage Earthworks 2 Stage Earthworks Sea Terminal Contract EPC Contract for the Plant Construction of the LNG Plant Gas Pipeline Engineering Contract Gas Pipeline Construction Contract Central/West Gas Pipeline Construction Start-up of Commercial Operation

7 Project Finance All multilateral funding approved: $400 million Inter-American Development Bank $300 million IFC, World Bank $450 million US Export-Import Bank $250 million Italy Sace Export Credit Agency $300 million Korean Export-Import Bank Largest IADB and World Bank loans to private sector in history Rigorous social and environmental due diligence prior to financing decisions confirm Project s exemplary performance Coordination with the IDB and the World Bank will strengthen Project contributions to sustainable development Banco de Credito del Peru (BCP) is arranging a local bond offering of up to $350 million that should be placed by mid- 2008

8 Construction of the plant in Melchorita Approximately 2,000 workers daily Site preparation complete Base of storage tanks complete Temporary offices built Camp construction complete Marine terminal advancing

9 Pipeline construction contract awarded to Techint in October 2007 Pipe production and delivery is underway Commenced construction of coastal contractor camps Pipeline Construction Commenced Right of Way grading

10 Exemplary Social and Environmental standards PERU LNG Social Investment programs: Local Buy-in: aim to promote participation and eventual ownership from local communities Sustainable: deliver lasting benefits Transparent: open to internal and external scrutiny with regular reporting to stakeholders Prevent Duplication: avoid overlap with other agencies and promote cooperation Measurable: identify targets and measure success

11 Positioning Peru as a Global Energy Leader

12 Positioning Peru as a Global Energy Leader Countries with natural gas liquefaction plants

13 Positioning Peru as a Global Energy Leader Countries with natural gas liquefaction plants

14 Positioning Peru as a Global Energy Leader Countries with natural gas liquefaction plants The first and only LNG plant in South America

15 Gas Prices Calculation $/mmbtu Reference Price Reference Price Distribution Cost Regasified Cost Maritime Transport Cost $1.93 $8.50 Regasified USA Market Internal Gas Pipeline (Distribution to the final customer) Henry Hub FOB Price Peru $6.57 LNG LNG Plant Cost + Transport $3.92 Transport Well Head Price $2.65 Value Chain in Peru PERU LNG

16 PERU LNG : US$3.8 billion Investment Regasification Terminal Marine Transport Other related investments $ 1,150 MM 850 Upstream development Block 56 (Pagoreni) Other investments in Peru 300 Operations 500 Funding 700 Chiquintirca Plant Pipeline PERU LNG Project investment 2,300 LNG Plant and Marine Terminal $ 3,800 MM

17 Single project of largest investment in Peru 3,800 3,000 2,795 2,500 2,000 1,700 2,022 Investment 1,614 Export MMUS$ 1,500 1,000 1, Liquids + gas LNG Project Antamina Yanacocha The estimated value of the LNG project exports at the beginning of the operations. Yanacocha and Antamina exports refer to 2006 Source: SNMPE

18 Strong GDP growth: Economic impact - The Project is expected to increase Peru s GDP by 0.5% annually Income to the state: 0.5 % PBI - Peru will receive approximately US$200 million annually in taxes and royalties, approximately US$4 billion over 18 years - Distributed to the regions in the area of influence through CANON and FOCAM Increased revenues: Exports will generate an average of US$1.4 billion in revenue to the economy per year

19 MMUS$ Hydrocarbon Trade Balance Downstream investments Trade Balance 500 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

20 Abundant reserves meet local demand and export market 24.6 The hydrocarbon potential of Peru is Probable enormous. reserves Potential for exploration; more than 40 TCFs in Peru to be discovered. 2.0 Block 57 More exploration must be incentivized to discover more reserves Blocks 88 y 56 Proven reserves PERU LNG Project Local Demand * (20 Years ) Electric: 3,25 Industry: 1,10 Petrochemical: 1,46 Residential: 0,10 Vehicular: 0,20 * Local demand includes three petrochemical plants and aggressive growth of local demand.

21 Incentives for further exploration The possibility of export market creates incentives for further exploration and more investment High probability of discovering more reserves in the area of Camisea Members of the PERU LNG consortium are investing in exploration: Hunt Oil en Blocks 76 y 143 Repsol is exploring in Blocks 39, 90 and also in Block 57 in partnership with Petrobras Hunt, SK and Repsol, members of Camisea Consortium exploring in Block 56 Gas, TPC Lote 57 Lote 76 Pagoreni Cashiriari San Martin (I y III) Exploratory Wells wells 6 Discoveries 86 % Success

22 Investment Destination Peru Proven reserves to satisfy domestic and export needs Clear priority of internal market first Abundant excess reserves for export project Stability to assure long term investment of billions of dollars Government legal and tax stability Investment agreement that guarantees rules of the game over the life of the project These favorable investment conditions have made Peru a global investment destination in the past few years with growing investment 16 exploration contracts in exploration contracts in 2007

23 LNG and the Petrochemical industry They are not exclusive The two industries complement each other There are sufficient reserves for the both Projects of different timetables In 2003 when the LNG project began the petrochemical industry was not economically viable in Peru Later the prices of gas rose sharply and the petrochemical industry recently began to seek other suppliers LNG project is underway To date PERU LNG has already invested more than US$1,000 MM Hydrocarbon projects of great magnitude take several years to mature Petrochemical industry has yet to began studies that are required before commencing any construction

24 LNG Marketing PERU LNG transforms natural gas from its gaseous state to liquid state (LNG) 4.2 TCF of LNG produced at the Pampa Melchorita plant committed to Repsol Comercializadora To date, Repsol Comercializadora has placed 500 MMSCF/D of natural gas to the Mexican market Camisea PERU LNG REPSOL Comercializadora 2. pipeline 4. marine terminal 1. Upstream 4. Export to final market 3. Melchorita plant

25 PERU LNG Project Single project of largest investment in Peru The first and only liquefaction plant in South America Worldwide example of engineering, construction, safety, environmental and social standards Transparent conduct, respecting all Peruvian and international laws and norms Significant contribution to the sustainable development of Peru and its people

26 THANK YOU