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.

IN PICTURES: 5 Tips To Reading The Balance Sheet

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 Perú 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.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Investing

    Time to Bring Active Back into a Portfolio?

    While stocks have rallied since the economic recovery in 2009, many active portfolio managers have struggled to deliver investor returns in excess.
  2. Economics

    Investing Opportunities as Central Banks Diverge

    After the Paris attacks investors are focusing on central bank policy and its potential for divergence: tightened by the Fed while the ECB pursues easing.
  3. Stock Analysis

    The Biggest Risks of Investing in Pfizer Stock

    Learn the biggest potential risks that may affect the price of Pfizer's stock, complete with a fundamental analysis and review of other external factors.
  4. Stock Analysis

    Allstate: How Being Boring Earns it Billions (ALL)

    A summary of what Allstate Insurance sells and whom it sells it to including recent mergers and acquisitions that have helped boost its bottom line.
  5. Chart Advisor

    Copper Continues Its Descent

    Copper prices have been under pressure lately and based on these charts it doesn't seem that it will reverse any time soon.
  6. Options & Futures

    Cyclical Versus Non-Cyclical Stocks

    Investing during an economic downturn simply means changing your focus. Discover the benefits of defensive stocks.
  7. Markets

    PEG Ratio Nails Down Value Stocks

    Learn how this simple calculation can help you determine a stock's earnings potential.
  8. Stock Analysis

    What Exactly Does Warren Buffett Own?

    Learn about large changes to Berkshire Hathaway's portfolio. See why Warren Buffett has invested in a commodity company even though he does not usually do so.
  9. Investing Basics

    How to Deduct Your Stock Losses

    Held onto a stock for too long? Selling at a loss is never ideal, but it is possible to minimize the damage. Here's how.
  10. Investing

    What’s the Difference Between Duration & Maturity?

    We look at the meaning of two terms that often get confused, duration and maturity, to set the record straight.
  1. Which mutual funds made money in 2008?

    Out of the 2,800 mutual funds that Morningstar, Inc., the leading provider of independent investment research in North America, ... Read Full Answer >>
  2. Do hedge funds invest in commodities?

    There are several hedge funds that invest in commodities. Many hedge funds have broad macroeconomic strategies and invest ... Read Full Answer >>
  3. What does low working capital say about a company's financial prospects?

    When a company has low working capital, it can mean one of two things. In most cases, low working capital means the business ... Read Full Answer >>
  4. Do nonprofit organizations have working capital?

    Nonprofit organizations continuously face debate over how much money they bring in that is kept in reserve. These financial ... Read Full Answer >>
  5. Can a company's working capital turnover ratio be negative?

    A company's working capital turnover ratio can be negative when a company's current liabilities exceed its current assets. ... Read Full Answer >>
  6. Does working capital measure liquidity?

    Working capital is a commonly used metric, not only for a company’s liquidity but also for its operational efficiency and ... Read Full Answer >>

You May Also Like

Trading Center