Camisea consortium rejects contract renegotiations

The general manager of Texas-based Hunt Oil, which is leading the international consortium responsible for exporting natural gas from the Camisea gas field, said Thursday they have no plans to renegotiate their contract with the Peruvian government in order to allot part of the supply to the country’s internal market.

“We haven’t begun talks about that topic and there is no intention of doing so,” Carlos Del Solar told Radio Programas radio. He added that government plans to renegotiate the contract would jeopardize investment stability in Peru, because “the rules of the game are already established.”

The Camisea gas fields are located in Peru’s south-eastern Amazon basin and thought to hold some of the largest undeveloped gas reserves in South America. It’s one of Latin America’s key energy infrastructure projects.

Block 88, which accounts for some 80 percent of Camisea’s reserves, was originally intended to supply Peru’s internal market, however the Peru LNG consortium is now planning on exporting most of the gas to Mexico at a rate of 500 million cubic feet per day. The export contract provides the consoritum with 620 million cubic feet per day, leaving 120 million surplus.

In early February, Energy Minister Juan Valdivia said the government would try to renegotiate parts of the contract in order to supply Peru’s growing internal energy demand.

Several energy and environmental analysts applauded the news saying it is a mistake to export such a large portion of the country’s known natural gas reserves. Accelerated glacial melting caused by global warming threatens to drastically decrease the nation’s fresh water supply. It could also possibly cripple hydroelectric generation, which accounts for about 70 percent of electricity production.

The president of Perupetro, Daniel Saba, agreed Thursday saying it was an error to modify the original contract and allow natural gas from Block 88 to be exported. “If all of Block 88 went to the internal market we would have gas for the next 60 years,” daily La Rep├║blica reported Saba saying.

Del Solar fired back at Saba saying, “it appears very bad that someone whose principal function is to promote investment in the hydrocarbons sector is talking of renegotiating contracts.” “In the first place,” added Del Solar “contracts are legal contracts that are protected by article 62 in the Constitution, they can only be renegotiated by a mutual agreement.”

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