PrintOil is the dominant fuel source in Peru. In 2004, oil represented 56 percent of Peru’s total energy consumption of 0.6 quadrillion Btus. Hydroelectricity is the second-largest component, representing 33 percent in 2004.
However, the development of the Camisea natural gas project has led to increased use of natural gas in the residential, industrial, and power generation sectors. In addition, the development of an integrated liquefied natural gas (LNG) terminal will allow Peru to become an important regional exporter of natural gas in the near future.
Oil
Peru’s oil production has increased in the last two years as new projects have come online, but the country is still a net oil importer. Despite increased oil production in recent years, Peru relies upon imports for about one-third of its oil needs.
According to Oil and Gas Journal (OGJ), Peru had 930 million barrels of proven oil reserves in 2007. The country produced 115,000 barrels per day (bbl/d) of total oil liquids in 2006, of which 67 percent was crude oil. This was slightly higher than 2005 levels, but much higher than 2003 production of 92,000 bbl/d: increasing natural gas liquids (NGL) production represents the bulk of the increased oil production in recent years, as crude oil production in Peru has been in long-term decline for the last decade. In 2006, Peru consumed an estimated 154,000 bbl/d and imported an estimated 39,000 bbl/d of oil. Most imports come from Ecuador and other South American countries.
The largest oil producer in Peru is Argentina-based Pluspetrol, which controls over one-half of the country's entire crude oil production. Other major producers include Occidental Petroleum, Petrobras, and Petro-Tech Peruana.
Peru mostly privatized the former state-owned oil company, Petroperu, in 1993. Still, Petroperu continues to control the country's only crude oil pipeline, most of the refineries, and a majority of the retail oil products market.
Exploration and Production
Peru's crude oil production is concentrated in the northern part of the country. In particular, the largest oil blocks are Block 1-AB (Pluspetrol) along the border with Ecuador, Block 8 (Pluspetrol) in the northeastern Amazon region, Block X (Petrobras) in the northwest, and Block Z-2B (Petro-Tech Peruana) off the northwest coast. Block 1-AB and 8 account for over 65 percent of Peru's total crude oil production. Most of crude oil produced in Peru is a heavy, sour variety known as "Lorento," with 20° API and 1.2 percent sulfur content.
In 2006, Barrett Resources announced that it would spend $1 billion to develop Block 67, located in Peru’s Amazon region. Exploration at Block 67 in the late 1990s first discovered commercial quantities of crude oil. At the time, there was no decision to proceed with the project, but rising world oil prices have caused a re-evaluation of the area. The project could begin production by 2010, eventually reaching 100,000 bbl/d. The project will necessitate the construction of a new pipeline between the area and the existing Norperuano system (see below).
In June 2005, Petro-Tech announced Peru’s first offshore oil discovery, the San Pedro 1X well, which is located in Block Z-2B. The well had initial production of 1,200 bbl/d. Petro-Tech has plans to drill additional wells on Block Z-2B in order to increase production to 11,000 bbl/d. Petro-Tech also plans to expands its offshore exploration at Blocks 6, 33, 35 and 36. In 2004, Occidental Petroleum announced that it had discovered at least 100 million barrels of recoverable reserves in Block 64, located in the Amazon basin; the company also announced that it would increase its investments in Blocks 101 and 103 in the same area.
Peru held its latest oil licensing round in 2006. Perupetro signed exploration contracts for 16 blocks, including 116 (Hocol), 125 (Barrett Resources)
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