Overview

Peru sits on large gas and petroleum reserves, but has only recently begun developing them. The Camisea gas project started in 2004 and is the country’s major source of production. Hunt Oil made the decision to invest in an LNG plant to generate a greater return on investment. Peru is the first and only country in South America to export LNG.

Peru is investing in gas transport and power generation infrastructure to increase domestic use of the resource. The country’s gas market has grown as infrastructure has become operational. Gas is replacing expensive liquid fuels for power generation and will be used to supplement the country’s large hydropower resource. This will help bring down the cost of electricity, making it more accessible to the population.

While oil and gas production promises to bring considerable prosperity, the industry is facing local opposition. Companies are accused of using up the scarce water resources and disrupting communities without helping to lift them out of poverty. This is not just confined to communities in the Amazon. The Punta Lagunas project has been delayed by fishermen protesting that gas production will destroy their livelihood. In response, the state has recently passed legislation requiring projects to get free, prior and informed consent from the indigenous people before they can go ahead. This is making it more difficult for gas projects.

Despite growing regulatory difficulties, the country’s gas production is set to grow. The Punta Lagunas field will only take six months to come online once the dispute with the local fishermen is resolved. There remains significant potential to increase gas production in Peru. 

Profile uploaded: 03/05/2013