If the world has any chance of providing enough energy to meet expected future demand from the developing world, then Peru is one of many places that must be explored and developed. The oil and gas industry has started to direct capital here and has recently started up production from a large onshore discovery.

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Camisea Field
One of Peru's biggest areas for oil and gas is the Camisea Field, located in the southeastern part of the country. The government recently revised its estimates of natural gas reserves here to 13.8 Tcf. This was the third time in two years that the estimates were revised upward. Some politics may be behind this revision as the opposition party in Peru claimed that too much natural gas was earmarked for export, leaving too little for domestic use.

In 2000, a consortium led by Hunt Oil, a private oil and gas company, was awarded the rights to develop the natural gas reserves at the Camisea Field. Several years later, construction was begun on a liquefied natural gas (LNG) facility to export excess natural gas to world markets. Production at this field is currently coming from blocks 56 and 88.

This LNG facility recently started up and began exporting natural gas. The first shipment of natural gas arrived in the United States in September 2010.

Other Players
Repsol (NYSE:REP), a Spanish oil and gas company, is also a partner in this consortium, along with several other companies. Repsol is active in other areas of Peru, with interests in more than a dozen blocks. Besides Camisea, Repsol is involved with the Kinteroni Field, where the company expects first production in 2012.

Talisman Energy (NYSE:TLM) is also active in Peru, where the company has interests in 4.5 million acres in five onshore blocks. The company spent $70 million in capital in Peru in 2009, acquiring seismic and setting up future development plans.

Ecopetrol (NYSE:EC) also has exploratory properties in Peru, in both the onshore and offshore area. The company has interests in several onshore blocks with Talisman Energy and Petrobras (NYSE:PBR). The company has been acquiring seismic and has the goal of drilling an exploratory well in Peru in 2010.

In the offshore area of Peru, Ecopetrol has interests in eleven offshore blocks. The company is in a joint venture called Savia PerĂº S.A., with a Korean oil company. The joint venture plans to spend $2.5 billion over the next seven years to explore and develop various Peruvian properties. If the joint venture is successful, production is expected to reach 50,000 barrels of oil equivalent (BOE) per day - a significant increase from the 13,000 BOE per day produced in 2009.

Bottom Line
Peru is attracting capital from the oil and gas industry as it looks for sources of growth for the next few decades. The country has already started up one main project and have more coming up, so prospects look promising for this South American nation. (For more, see Oil And Gas Industry Primer.)

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