Friday, September 29, 2023

Peru calls bid round as crude output dwindles

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(S&P Global Platts) Peru’s government plans to call for bids in June for up to seven crude oil producing blocks on its northern coast as production dwindles.

The blocks in the Talara Basin, both onshore and offshore, lie in mature fields whose contracts are close to expiration, oil contracting agency Perupetro said in a Jan. 21 email to S&P Global Platts.

The Talara Basin has been operating for over a century, with most blocks in the area producing less than 500 b/d.

The bid round represents the first attempt to attract investment to Peru’s hydrocarbons sector since the country’s Congress annulled E&P contracts awarded to Ireland’s Tullow Oil in 2018.

The move comes as Peru’s hydrocarbons industry, which has seen E&P contracts decline to nine from 62 a decade ago, faces a series of challenges.

State oil company Petroperu and Peruvian President Pedro Castillo, a Marxist union leader, are both under investigation for illegally awarding a biodiesel contract, while ruling party Peru Libre (Free Peru) is pressuring Mr. Castillo to nationalize both the Camisea gas fields and Repsol’s 117,000 La Pampilla oil refinery following a massive oilspill off Lima Jan. 15.

Congress, which attempted to impeach Castillo in November, now seeks to oust Energy and Mines Minister Eduardo Gonzalez for the controversial appointment of one of Castillo’s backers to head Perupetro despite lacking experience in the hydrocarbons sector.

“It’s highly improbable that investors will come at this time, given the government’s anti-investor stance,” Cesar Gutierrez, an energy consultant and former head of Petroperu, told Platts in a telephone interview. “An area with declining production will only attract small firms.”

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