Hunt Oil wins rights to develop new gas field in Peru

Jun 10, 2004 02:00 AM

Peru granted a group led by Hunt Oil, a closely held oil and natural gas company, development rights on a natural gas field estimated to contain 3 tcf of reserves.
Hunt and SK Group agreed to pay royalties as high as 38 % on the gas extracted from the Pagoreni field, higher than the 37 % Hunt is paying on gas extracted from the adjacent Camisea field, Peru's Energy and Mines Ministry said.

Hunt plans to invest $ 2.1 bn to develop the Pagoreni field and plants that will allow it to sell 2.7 mm tpy of natural gas to Belgium's Tractebel, which will export the gas to Mexico, said Carlos del Solar, general manager of Hunt's Peruvian unit. The gas that Hunt extracts from Camisea, which contains 13 tcf of reserves, is earmarked for the local market.
"We are satisfied with the agreement," del Solar said.
Hunt has led a $ 1.6 bn investment in the development of the Camisea field, which supplies Lima and Callao through a 460-mile pipeline. The Camisea and Pagoreni projects will allow Peru to become by 2008 a net exporter of energy, the ministry said.

Hunt, which controls 70 % of the consortium, and SK Group will pay a 38 % royalty on the gas extracted from Pagoreni when the price for natural gas is above $ 4 per million Btu. Below that price, the royalty would drop to 30 %.
"The royalties are higher than the royalties for Camisea, but that depends on prices" for gas, del Solar said.
The contract on the Pagoreni field still needs to be approved by PeruPetro, the state licensing oil company, and the Economy and Finance Ministry, said Quijandria. Del Solar said he expects the contract to be signed later on.

Hunt started the paperwork to obtain the approval of its environmental plan to build a liquefying plant in the desert area between the towns of Canete and Chincha in the Peruvian coast, del Solar said. After liquefying the gas, Hunt would sell it for export. Both towns, totalling 300,000 people together, are claiming the land where the plant would be located, which may delay the authorizations needed to start the construction.
"We are optimistic this will be solved quickly," del Solar said. "The cabinet chief is now taking care of the issue."

Hunt Oil controls 35 % of the group that drills the Camisea field. Argentina's PlusPetrol, which performs the drilling activities, has a 25 % stake in the venture, while Korea's SK Group controls 18 %, Techint Argentina controls 10 % and Algeria's Sonatrach owns 12 %.

Source: Bloomberg
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