Peru government launches auction for offshore oil concessions

5/31/2013

Peru government launches auction for offshore oil concessions


BY RYAN DUBE

LIMA -- Peru's government launched on Friday a public auction for nine offshore oil concessions, attracting the interest of international oil firms like ExxonMobil and Chevron, the agency responsible for the auction said.

Government agency Perupetro said the auction is expected to attract investments worth at least $450 million.

"The minimum investment (in each concession) will be $50 million, but the companies can invest much more," the head of Perupetro, Luis Ortigas, said in a press conference.

Perupetro said that at least 20 companies from countries like the U.S., Canada, France and Russia are interested in participating in the auction. Two of these companies are Exxon Mobile and Chevron, Mr. Ortigas said.

Perupetro expects to award the concession contracts on Oct. 17.

Mr. Ortigas said state-owned oil company Petroperu will have the option to participate with up to a 25% stake in each concession, but it won't invest in exploration.

"If there is a discovery, then in this case Petroperu will take up to 25%," Mr. Ortigas said.

Perupetro said investments in offshore oil concessions have totaled about $2 billion in the last few years. It expects investments in offshore concessions to double in the next five years.

Perupetro had originally planned to launch an auction with more than 30 concessions, which would have also included blocks located in Peru's Amazon region.

The agency postponed the auction for the concessions in Peru's jungle region due to delays with the implementation of new legislation that requires the government to consult with indigenous communities prior to the development of natural resource projects.

Mr. Ortigas said Perupetro plans to launch an auction before the end of this year for 26 oil concessions in the Amazon.

Mr. Ortigas said the indigenous consultation law could cause initial delays to oil activities in the jungle, but in the long run the legislation will be "favorable."

"We won't have discrepancies with the communities later on," he said.

The last time Peru held an international auction for oil concessions was in 2010 when it auctioned off 24 blocks.

Dow Jones Newswires

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