New Market Report: Peru Oil & Gas Report Q3 2012

New Energy research report from Business Monitor International is now available from Fast Market Research

by Bill Thompson

(WireNews+Co) - Boston, MA - 20 October 2012

BMI View: The oil & gas sector stands to benefit from a positive privatisation trend and an increase in production over the coming years. Refinery expansion is on the agenda and fresh licensing initiatives are expected. Furthermore, there are few indications that policy changes could derail gas expansion or undermine IOC involvement in the country, as was feared during the transition to President Humala's presidency in June 2011. Political risk has, however, heightened as relations with indigenous communities sour over land rights.

The main trends and developments we highlight in the Peruvian Oil & Gas sector are:

- National oil company Petroperu has plans to list 20% of its stock on the Lima bourse in the second half of 2012, as well as a stated desire to resume oil production for the first time since the 1990s. Both are part of a larger goal to have the company much more closely resemble Brazil's Petrobras and Colombia's Ecopetrol, as well as to increase the overall level of investment in the oil industry.
- In February 2012, Perupetro announced plans to drill 30 exploratory wells throughout the country by year-end. The number has since been reduced to 22 wells because of concern for local communities. Between 2008 and 2010, Peru drilled 16 exploratory wells. Eighteen wells were drilled in 2011.
- BMI forecasts that oil and liquids production will more than double over the coming five years, from an estimated 166,170 barrels per day (b/d) in 2012 to 351,170b/d in 2016, as investment in exploration and production (E&P) continues to rise. Over the same period strong economic growth is expected to see consumption rise from 201,480b/d to 222,390b/d. There will be implied export capability of 128,780b/d by 2016, although this is set to then fall in line with production.
- The outlook for the country's gas sector is similarly bright. Gas production is forecast to jump from an estimated 9.3bn cubic metres (bcm) in 2012 to 13.0bcm in 2016. Gas consumption, meanwhile, is expected to grow steadily, rising from 6.37bcm in 2012 to 8.19bcm by 2016. The gas export potential therefore increases to 4.81bcm, with scope for a further rise to 5.74bcm by 2021.
- By 2016, Peru's oil and gas exports are set to yield some US$6.61bn as oil import volumes of an estimated 36,500b/d in 2012 are transformed into potential net exports of 128,780b/d in 2016. Thereafter, the higher rate of oil consumption relative to production growth will see export revenues fall towards US$5.67bn by 2021, corresponding to a decline in oil exports.

View Full Report Details and Table of Contents (http://www.fastmr.com/prod/451342_peru_oil_gas_report_q3_2012.aspx) (http://www.fastmr.com/prod/451342_peru_oil_gas_report_q3_2012.aspx)

At the time of writing we assume an OPEC basket oil price for 2012 of US$107.05/bbl, falling to US$99.10/bbl in 2013.

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