Natural gas from Camisea decreases electricity costs by 30 percent

Deputy Energy Minister Daniel Cámac said Tuesday the cost of electricity in Peru has decreased by 30 percent due to natural gas production in the Camisea gas fields, located in the country’s south-eastern Amazon basin. Cámac said some companies have been able to save more than 50 percent of their production costs after switching to natural gas, state news agency Andina reported.

“Using natural gas in their operations is very profitable for companies and the level of savings that they receive always depends on the sector,” Cámac was quoted as saying. He said Peru’s economic growth will increase the demand for electricity by 10 percent in 2011 and 2012.

“Following the international financial crisis we are seeing a recovery in the demand for electricity in the country,” said Cámac. “We are guaranteeing that by 2012 we will have a daily production of 1.5 billion cubic feet of natural gas, which we believe will be more than required at that time for the internal market.”

The Camisea gas project is considered one of Latin America’s key energy infrastructure projects and thought to hold some of the largest undeveloped gas reserves in South America. The consortium that runs the project includes Argentina’s Pluspetrol, Repsol of Spain, U.S.-based Hunt Oil, and South Korea’s SK Energy.

Cámac added that hydroelectric projects, particularly the Inambari dam, are also expected to be an important source of electricity in Peru.

“The objective is that through the construction of important hydroelectric projects we will provide the Peruvian market with long term security for the supply of (electricity),” said Cámac.

The Inambari dam, located in the southern Amazon region, is the country’s largest hydroelectricity project and fifth largest in Latin America. The concession holder, Brazilian consortium Egasur, is expected to invest $4 billion in the project, which will have an installed capacity of 2,000 megawatts of electricity. The dam will flood around 150 square miles of land and may displace more than 3,200 people.

According to an article published by the Center for International Governance Innovation, however, most of the energy generated by the dam will be exported to Brazil.

“Although the Inambari dam could supply about half of Peru’s energy consumption, reports are that Inambari will be almost completely devoted to exporting power to Brazil for at least the first few years.”

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