View all newsletters
Receive our newsletter - data, insights and analysis delivered to you
  1. Comment
March 2, 2018

Peru revises its hydrocarbon legislation to sustain upstream momentum

Perupetro on behalf of the Peruvian government is making significant efforts to improve the upstream sector through new licensing mechanisms paired with a revision of hydrocarbon regulations, and complemented by joining the Extractive Industry Transparency Initiative (EITI).

By GlobalData Energy

Perupetro on behalf of the Peruvian government is making significant efforts to improve the upstream sector through new licensing mechanisms paired with a revision of hydrocarbon regulations, and complemented by joining the Extractive Industry Transparency Initiative (EITI).

Free Report
img

Carbon Capture, Utilization, and Storage set to play key role in reducing global emissions

Carbon Capture, Utilization, and Storage (CCUS) has emerged as one of the key technologies set to reduce carbon emissions, proving especially useful in projects where eliminating all process emissions is not possible  As a result, Oil & Gas companies are investing in CCUS projects as part of ongoing strategies to reduce their emission footprint and boost sustainability efforts.   Our recent report, CCUS Strategies in Oil and Gas, reveals that the energy sector accounts for approximately three-quarters of total greenhouse gas emissions and has a key role to play in reducing global warming over the coming decades.   Our report will help you:  
  • Understand CCUS and its importance in reducing global emissions 
  • Analyze CCUS plant trends 
  • Gain insight from leaders in the Oil & Gas industry on implementation of CCUS projects 
Download the report now to get ahead of this trend and make strategic investments.  
by GlobalData
Enter your details here to receive your free Report.

These measures have already resulted in an increasing interest in Peru, particularly in its offshore frontiers. Moreover, a centralisation of tasks within Perupetro through a reform of the hydrocarbon law could ease the bureaucracy burden for E&P companies.

However, the reform of the hydrocarbons law and royalty regime are not yet finalised and could be delayed, having originally been expected for 2017. Last but not least, the on-going changes are not expected to reverse the production decline from 2020 onward in the short-to mid-term.

Although Peru shares the prolific Andean forelands basins ranging from Argentina to Colombia and holds significant hydrocarbon reserves, the country is less recognised as a major hydrocarbon producer compared to its South American neighbours.

Despite favourable fiscal terms, a lack of licensing rounds coupled with the recent downturn resulted in a lack of investments in the exploration and production sector. One of the perceived challenges to do business in Peru is the high regulatory burden, decelerating and impeding an otherwise more flourishing hydrocarbon sector.

Production and Awarded Licenses, 2000 onwards

Source: Upstream Analytics                                                                                                                                                                                     © GlobalData

 

However, conditions for licensing are improving by introducing direct negotiations and technical evaluation agreements. Under this regime, three offshore blocks have been awarded to Anadarko in the past year followed by awarding six offshore licenses to Tullow Oil in 2018, pending on governmental approval.

Complementary to the direct negotiations, companies are allowed to redefine block areas in line with their geological understanding of the area. Perupetro has also introduced technical evaluation agreements (TEA), which allow E&P players to license frontier blocks for two years, getting access to Perupetro’s database and in return requiring a light work program, with the aim to encourage exploration and sign future exploration and exploitation contracts.

Perupetro has stated that the current royalty regime scheme is not adequate to reflect abrupt changes in petroleum prices resulting in lower stake takes. To address this issue, Perupetro is proposing to reform the royalty system including factors based on production, oil prices and profitability. Alternatively, a function based on area, well productivity, production and hydrocarbon price could be introduced.

While current production would not be affected by a new royalty due to the fiscal stabilisation act, it would rather impact new exploration contracts providing production growth for the mid to long-term.

Related Companies

Free Report
img

Carbon Capture, Utilization, and Storage set to play key role in reducing global emissions

Carbon Capture, Utilization, and Storage (CCUS) has emerged as one of the key technologies set to reduce carbon emissions, proving especially useful in projects where eliminating all process emissions is not possible  As a result, Oil & Gas companies are investing in CCUS projects as part of ongoing strategies to reduce their emission footprint and boost sustainability efforts.   Our recent report, CCUS Strategies in Oil and Gas, reveals that the energy sector accounts for approximately three-quarters of total greenhouse gas emissions and has a key role to play in reducing global warming over the coming decades.   Our report will help you:  
  • Understand CCUS and its importance in reducing global emissions 
  • Analyze CCUS plant trends 
  • Gain insight from leaders in the Oil & Gas industry on implementation of CCUS projects 
Download the report now to get ahead of this trend and make strategic investments.  
by GlobalData
Enter your details here to receive your free Report.

NEWSLETTER Sign up Tick the boxes of the newsletters you would like to receive. The top stories of the day delivered to you every weekday. A weekly roundup of the latest news and analysis, sent every Friday. The industry's most comprehensive news and information delivered every month.
I consent to GlobalData UK Limited collecting my details provided via this form in accordance with the Privacy Policy
SUBSCRIBED

THANK YOU

Thank you for subscribing to Offshore Technology