A Hunt Oil Co.-led group is set to begin pumping natural gas from the $1.6 billion Camisea field in Peru’s Amazon rainforest, the culmination of a 20-year project that was delayed by guerrilla warfare and political opposition.
Dallas-based Hunt Oil, together with partners from Argentina, South Korea and Algeria, today will start moving gas through a 730-kilometer (454-mile) pipeline from Peru’s eastern jungle, across the Andes mountains to Lima on the Pacific coast.
The government expects Camisea will boost the country’s $61 billion domestic product by 0.8 percent by reducing $700 million net oil imports by half and generating funds to improve conditions for the nation’s 13 million poor. Hunt, a 70-year-old company owned by Dallas billionaire Ray
Hunt, also is seeking to export gas from to Mexico, and later the U.S., from Camisea.
“Camisea is a project that will allow us to change the whole energy model and depend on a resource that we had below the ground without using it since 1984, when it was discovered,” Energy and Mines Minister Jaime Quijandria told reporters in Lima on Monday.
Royal Dutch/Shell Group, which discovered Camisea 20 years ago, and Exxon Mobil Corp. gave up on the project in 1998, after saying the project wasn’t profitable enough.
During the 1980s Shell couldn’t reach an agreement with the government as several political groups such as Javier Diez Canseco’s United Left opposed international companies’ efforts to extract Peruvian gas and other resources. At the time, the Peruvian jungle also was a haven for guerrilla
groups such as Shining Path and Tupac Amaru.
`Past Errors’
“Peru learned a lot from past errors, and we believe they’ve learned their lesson,” Norberto Benito, who runs the Peruvian unit of Buenos Aires-based Pluspetrol SA, another partner in the project, said in an interview. “We will keep investing as long as the country shows it is
moving forward.”
Camisea’s operators, which also include Seoul-based SK Group, Techint Argentina SA and Algeria’s state-owned Sonatrach, will pump about 100 million cubic feet a day from the six wells in the Urubamba basin, a remote part of the Amazon that’s home to the Machiguenga and Nanti tribes.
The shipments should generate annual revenue of $400 million, of which 37 percent will go the government, during the remaining 36 years of the contract, Benito said.
Mexico
Hunt is trying to raise financing for a $2.1 billion plan to liquefy and export 600 million cubic feet a day of gas from Camisea to Mexico, said George Beranek, manager of the Washington energy consulting firm PFC Energy. Hunt is seeking contracts with buyers for gas in Mexico, where there’s not enough gas for power plants because of lack of investment by the government’s oil monopoly.
“There is demand in the west coast for 2 billion cubic feet a day,” said Carlos del Solar, chief executive of Hunt Oil’s Peruvian unit. “We would be the best located project.”
Hunt is up against companies such as Shell, Europe’s second-largest oil company, which also is interested in selling gas in Mexico. Hunt would have to build the project from scratch, while Shell and other rivals would expand existing export terminals, Beranek said.
“I wouldn’t call it the most competitive project out there,” Beranek said.
Fujimori
In 2000, Hunt and Pluspetrol, encouraged by Peru’s then- President Alberto Fujimori’s plans for private companies to develop oil and gas reserves, won rights to tap Camisea.
A group led by Techint Argentina, a closely held engineering and construction company based in Buenos Aires, also signed up as partners to build the pipeline, while Belgium’s Tractebel SA won a contract to build a distribution network and sell the gas in the city of Lima. About $1.7 billion has been spent to drill wells and build the pipeline and distribution network.
Assurances by President Alejandro Toledo that private companies will be able to continue to exploit his nation’s oil and gas contrast with what is happening in other South American countries. Neighboring Bolivia and Ecuador are putting much of the business in the hands of state oil companies, ceding to public opposition to handing petroleum reserves to international companies.
In Argentina, President Nestor Kirchner’s caps on energy prices have paralyzed investment by companies such as Madrid- based Repsol YPF SA, Europe’s fifth-biggest oil company, sparking shortages of gas this year. Houston-based El Paso Corp. says the lack of clear regulations has made it
unprofitable to build power plants in Argentina.
Opposition
Hunt and Pluspetrol had to overcome opposition by environmentalists to drilling wells at Camisea, which is in a part of the Amazon inhabited by black jaguars, toucans and tarantulas. The project will lead to deforestation and bring new diseases to the 7,000 indigenous people who live in the area, Atossa Soltani, the executive director of Amazon Watch, an environmental protection group, said in an interview from Los Angeles.
“The inauguration of the project is a defeat for indigenous communities,” said Maria Ramos, the coordinator of Amazon Watch’s Peruvian campaign. “Rivers and forest will never be the same.”
The group will now try to persuade California’s public utility commission to refuse the authorization of purchases of the Peruvian gas.
