Peru has set new deadlines for submitting bids on contracts for development of the Camisea natural gas fields and for transportation of the gas to the Lima area, 500 km to the west of the fields.
The Camisea oversight committee decided to postpone the deadline late last month but did not set a new date at that time (OGJ, Aug. 2, 1999, Newsletter).
After a combine of Royal Dutch/ Shell and Mobil Corp. withdrew from the project last year, it was divided into two concessions: one for field development and another for transportation and distribution (OGJ, June 21, 1999, p. 30).
Bidders for the 40-year development contract now have until Dec. 14, 1999, to submit bid packages. Peru will announce the winner on Dec. 21. Bidders for the transportation package have until Nov. 9 to submit their bids, with awards slated for Nov. 15.
Since Peru called for separate development and transportation tenders, it has sold 17 sets of bid documents for the development concession and 23 sets for the transportation-distribution concession. Each set costs $15,000 and includes access to a database. Companies that purchase bid documents can also buy copies of the database for $65,000.
As many as six major energy companies have expressed interest in the fields, according to Gustavo Caillaux, president of Copri, the government committee overseeing Camisea negotiations.
Contract conditions
Caillaux said on Aug. 6 that a wellhead price cap for the gas had not yet been defined, nor had a price cap for gas sales to electricity generators. He added, however, that, with the preliminary contract data distributed in late July and the rest of the information that is available, companies could estimate costs.
The pricing of the gas is to be defined in the first half of September, says Caillaux, and definitive contract terms are to be ready Sept. 17 for transportation-distribution and Oct. 11 for development, following discussions with interested companies.
The committee says it is estimating an "initial private investment" in the contracts of "close to $2 billion." This compares with the $2.5 billion first estimated by Shell-Mobil, which was later increased to $3-3.5 billion. It is not clear, however, whether the revised project has the same scope as Shell-Mobil's. When asked about the discrepancy in project cost estimates, the Camisea committee told OGJ that the initial investment, without reinjection of some of the gas, would total about $2 billion for a smaller-scale project. If a decision is made to undertake a larger project, with reinjection of gas, then the project cost could reach $3 billion or more.
"We think that 31/2 years is sufficent to finish the first phase of the project and have it ready to operate," a committee official told OGJ.
The state will not invest in the project but will act as regulator and supervisor, Caillaux says.
Peru will collect royalties on Camisea production and distribute a percentage of the output in the regions that provide the natural resources. Its main aim is to deliver gas to the consumer at the lowest possible price. A major focus is on use of gas for power and industrial uses in the Lima area.
The project is designed first to meet local demand, which the committee expects to increase once there is evidence that ample gas supplies will be available. The market-estimated at 150 MMcfd of gas-is already large enough to make the project viable, according to the committee's consultants.
Subsequent project goals are to develop a petrochemical industry based on natural gas feed and eventually to export gas and liquids, although this plan has been dampened for the moment by growth of natural gas reserves in Bolivia, which exports gas to Brazil and which would also be a natural supplier to Peru.
Copri says that Camisea reserves total 13 tcf of natural gas and 600 million bbl of condensate and that the wells have a production potential of 100 MMcfd each.
