PERU: Overview of the hydrocarbons industry at the coronavirus juncture

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Despite the fact that the Peruvian liquefied natural gas (LNG) installation in Pampa Melchorita reported an increase in the volumes exported during the month of March 2020. The outlook for the Hydrocarbons industry will be impacted by the coronavirus situation (COVID-19). Lower demand for liquid fuels, reduction in LNG production and request for safeguards by the government will dictate the outcome of the industry under current market conditions.

Liquefied Natural Gas (LNG) Exports

According to data provided by state-owned Perupetro, a total of five loads left the facility during the month. The vessels loaded a total of 809,192 cubic meters of liquefied natural gas.

Compared to March 2019, this represents a 6.9 percent increase in volume. To recall, Peruvian LNG exports reached 756,762 cubic meters in March 2019.

Peruvian LNG export volumes also increased during the previous month when a total of 795,576 cubic meters were exported. The number of loads shipped remained the same.

Of the five cargoes that Peruvian LNG facilities exported in March, one landed in South Korea, while Japan and China each received two.

With the five charges in February, the facility has shipped a total of 567 charges since it began operating in June 2010.

The 4.45 million tons per year gas liquefaction plant is located 170 kilometers south of Lima. It receives gas through a 408 kilometer pipeline built through the Andes.

Liquefied Natural Gas (LNG) and Liquified Propane Gas (LPG) Production

Natural gas production in Peru has steadily declined and the LNG plant in Peru has been idle since the government issued a national shutdown a week ago to prevent the spread of the new coronavirus.

Gas production has fallen from 1.12bn cf / d on March 15, the day the shutdown began, to 779mn cf / d on March 22, according to the latest data from PeruPetro hydrocarbons agency.

The most significant upstream decline comes from Camisea block 88, Peru’s main gas block with proven reserves of 8.76 trillion cf. Production fell from 482mn cf / d to 143mn cf / d in the first week of the emergency. Gas block 88 is used for domestic consumption.

Production from Camisea block 56, with 1.67 trillion cf, increased slightly from 389mn cf / d to 407mn cf / d in the same period. Flows from block 56 are used in the country and for export through the Peruvian LNG plant south of Lima.

Peru LNG, which has a capacity of 4.4 million tons / year, has sent 12 shipments so far this year, with 11 destined for Asia and one for Europe. Export volume increased by 14% spread over five shipments in February compared to the same month the previous year, according to PeruPetro.

Peru LNG could not be reached for comment. The facility is operated by Hunt Oil, based in the USA. USA, and includes Marubeni from Japan, SK Innovation and Shell from South Korea.

Shell is responsible for marketing the LNG cargoes.

Pluspetrol de Argentina, the upstream operator of Camisea, said on March 17 that the gas complex, including a gas liquids fractionation plant in Pisco, 200 kilometers south of Lima, would operate normally. Pluspetrol produces 1.5 million tons of LPG per year per year, which represents approximately 80% of the national supply.

Electricity generation and other hydrocarbons

Electricity generation also declined over the past week as the industry, particularly the mines, closed. Gas fired thermal dispatch is directed downward and some plants are likely to shutdown in response to lower demand. Peru’s peak demand so far this month was 4,727MW on March 23, down from a peak of 7,124MW in February, according to data from network operator Sinac. Ricardo Labo, a partner at energy-focused law firm LQG, said the thermal plants would be temporarily closed as demand falls. “Mining companies account for around 30% of electricity demand, so it is natural that demand will decrease as they close,” he said. “Thermal plants will be the first to go offline.”

Requests to the Government

The Peruvian Hydrocarbon Society (SPH) of the private sector asked the government to take measures to safeguard the oil and gas industry. Before the double shock of the coronavirus and the collapse of oil prices, Peru’s oil production began to recover. Production reached approximately 60,000 b / d in the first half of March, almost 20% more than in the same month last year, and the SPH said this could now be lost.

The SPH wants the government to suspend or postpone tax payments

Source Argusmedia WMN

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