Peru has passed a detailed set of natural gas regulations under its Law for the Promotion and Development of the Natural Gas Industry that essentially sets the rules for the massive Camisea natural gas project.
The regulations confirm that the government will regulate tariffs for the sale of gas and the cost of transportation and distribution through the Energy Tariffs Commission (CTE), which regulates electricity tariffs.
Peru's new regulations dictate that all gas sales will be made at the reception point-the location where the producer delivers to the transporter the gas required by the users of the network. This can be either the wellhead or the "production inspecting point."
CTE also will set base tariffs for pipeline transportation and distribution and a formula for updating the figures, in real terms, on May 1 each year. The regulations guarantee transport and distribution concessions "a real annual profitability of 12%," says the government.
Camisea bidding
The Camisea project has been divided into two concessions: one for field development and another for gas transportation and distribution. The Cami- sea oversight committee is accepting bids for the transportation-distribution contract until Nov. 9 and for the development contract until Dec. 14. Concessions will be granted for a minimum of 20 years and a maximum of 60 years, including extensions.
The committee is prequalifying companies to present offers for the contract to operate the gas fields. It stressed that its target is to ensure the delivery of gas to the market at the lowest possible price and that it is prepared to extend the bid deadlines again if this will ensure competition from a greater number of bidders (OGJ, Aug. 23, 1999, p. 34).
The committee said it would announce the price cap for gas before the end of September. But potential bidders say they will need more time to meet the bid deadlines, as it is not possible to prepare bids, which are unconditional, with unknown factors.
The committee will give companies operating the transport and distribution concessions a guaranteed capacity for each year during the period for the recovery of their investment. This is to be covered by gas-fired electricity generators, other natural gas users, and a guarantee fund that will be charged to electricity tariffs. To benefit from the guarantee fund, investors may not use more than 33% of the capacity of the pipeline network for customers directly or indirectly linked with the transporters or distributors. To export gas or liquids, the companies must show that they have sufficient proven reserves to cover the domestic market constantly for a minimum of 20 years.
Although more than 40 data packages have been acquired for the concessions, only two companies, France's TotalFina SA and U.S.-based Duke Energy Corp., had prequalified as strategic operators for the project by Sept. 9, according to Juan Chamot, president of the Camisea committee. He did not specify whether the firms were seeking one or both concessions.
Electricity consultants say that the lack of a large enough market for Camisea natural gas production is still the main problem in nailing down potential bidders. Electricity generators, which will make up the bulk of the initial market, are seeking more flexibility in the take-or-pay contracts the project offers.
Their basic objection is that they generally operate between the peak hours of 6:00 p.m. and 11:00 p.m., while the Camisea committee wants a round-the-clock commitment.
