Peruvians briefing on Camisea
Aug. 19, 1998 Top Peruvian officials have begun a series of private meetings and briefings with companies interested in developing the Camisea natural gas and condensates fields.
The talks follow the July 15 decision by Shell Prospecting and Development Peru and Mobil Oil and Producing Peru to back out of a deal to spend $ 2.5 bn to tap the giant reserves.
The meetings began July 17 and include companies that have expressed interest in picking up the pieces after the Shell-Mobil departure.
Representatives from both companies are said to be participating in the meetings, though Shell has been cleaning up the Camisea drilling camp and is reported to have sent home much of its expatriate staff.
Energy and Mines Minister Daniel Hokama and top officials at state oil regulatory company Perupetro are meeting with company representatives to explain the revised terms for tendering the project.
Originally, Shell and Mobil had planned to develop the fields, install processing facilities and build
gas and liquids pipelines over the Andes Mountains to the coast. However, because the companies opted not to proceed, the government has decided to tender the project in pieces, with one company or group handling the production phase, another processing and pipelines, and a third distribution in Lima.
Companies participating in the meetings also are being given access to data rooms that contain information on the fields collected by Shell when it discovered Camisea in the mid-1980s and by both companies when they worked in the area between May 1996 and this July. This data will be crucial to companies considering developing the fields because Shell and Mobil discovered that fracturing in the reservoirs would result in lower liquids yields than expected.
There are doubts about whether breaking the project up will be viable.
Sources said the pipeline and processing component is the least attractive, but potentially among the most expensive parts of the project.
The government has offered to take a15 % stake in this part of the project in order to reduce investment requirements. However, it is unclear how much the developer of the fields could pay the pipeline operator and still make money, particularly since the domestic gas market currently is very small.
Liquids exports via Lima were supposed to provide early cash flow for the project, but the fracturing forced Shell to cut estimated production to 50,000 bpd last year from 100,000 bpd, and there were reports output could drop even further.
Developing the fields also is likely to be more expensive than anticipated. Which ever company wins that part of the project likely will want to export gas to Brazil to boost revenues, a point on which Shell and the government were unable to agree.
The government has said it hopes to tender the projects by the first quarter of next year.
