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China Optimistic on Peru Outlook, but Other Investors Wary

Bottom Line: China’s optimism as it enters final talks to acquire Petrobras’ assets in Peru is not shared yet with other potential foreign investors as the country fails to make good on promises to streamline the permit process and concessions lay dormant.

Analysis: China National Petroleum Corporation (CNPC) is in final negotiations to purchase Petrobras' approximately $2 billion in assets in Peru. The Petrobras offerings include concessions at Bloc X in Piura (where a CNPC subsidiary already operates at Bloc VI and VII), Bloc 58 in the Amazon near the Camisea Project (where there are proven gas reserves at the Urubamba 1X and Picha 2X wells), and a partial stake in nearby Bloc 57, operated by Repsol. The move comes amid Petrobras' sales of assets to finance deep-water exploration off the Brazilian coast and Peru’s effort to draw energy investors. The National Mining, Petroleum and Energy Society (SNMPE) trade association is pressuring Peru to streamline its permit process so that foreign companies can secure all necessary paperwork to start exploration in about one year.

At the same time we are witnessing major delays in contracts for gas projects in south Peru. The Nodo Energético del Sur project encompasses the construction of two thermal power plants in Mollendo (Arequipa) and Ilo (Moquegua), which will each add 500 mW in electric production. In discussing the project, Minister of Energy and Mines Jorge Merino highlighted that not…




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