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Breaking News:

Oil Stabilizes On Small Crude Draw

China’s CNPC Ready To Splash $2B On Peru Oil Field

Offshore

China’s biggest oil and gas state company, CNPC, is willing to spend US$2 billion on the development of Block 58 in southern Peru. The news was reported by Perupetro’s head, Rafael Zoeger, at a news conference.

The Chinese major will start development of the field this year, planning to drill 60 wells to tap into an estimated 3.9 trillion cu ft of natural gas. This represents 27.7 percent of Peru’s current gas reserves. Block 58 is located near Peru’s biggest gas deposit, Camisea. Production from Block 58 is slated to begin in 2023.

The Chinese company also has a 46.2-percent interest in another adjacent field, Block 57, operated by Spain’s Repsol, whose gas reserves are estimated at 2 trillion cu ft..

According to Zoeger, the gas produced by CNPC in Block 58 will be transported to the Peruvian coast and used for power generation, and, possibly as feedstock for a petrochemical plant that is yet to be built. If the plant is not built, the gas will be exported.

Peru is a modest oil producer, with daily output at 38,290 bpd as of end-2016 but it has the third-largest gas reserves in South America, at 426.1 billion cu m as of 2014. Oil reserves are estimated at 170 million tons.

Related: Saudi Arabia Signs $50 Billion Worth Of Oil Deals With The U.S.

The country has the only gas liquefaction terminal on the continent, in Pampa Melchorita. Earlier this year, the operator of the facility, Peru LNG, loaded the  first cargo bound for Europe since 2010. The cargo was the first of 401 to be received by the UK.

For CNPC, the investment in the Peruian oil and gas block is the latest move in a large-scale international expansion with a special focus on South America, as China grapples with depleting fields at home and much higher production costs than the government is comfortable with.

By Irina Slav for Oilprice.com

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