Oil & Gas in Peru:Past, Present & Future

Rio de Janeiro, March 2009

Dr. Daniel Saba de AndreaChairman of the Board

PERUPETRO S.A.

A little of history:

In Peru oil extraction and utilization began more than 10 centuries ago, when the natives used oil from outcrops or superficial reservoirs in the Northern Coast and in the South Highlands.

Oil was used mainly for roads and buildings as well as for home and medical applications.

First Oil well drilled in South America

A tubular well which discovered oil at 24 meters depht was drilled in November 1863 in the Tusillal stream, Zorritos, Tumbes, Northern Coast of Peru.

This well, that began producing 60 barrels per day of 35° API oil, was the first well drilled in South America, and one the first succesfully drilled worldwide.

Peru is located within one of the most prolific mega tendencies in hydrocarbons in South America, the subadean southamerican megatendency.

Fuente: Adaptado de USGS

The areas with hydrocarbon potential in Peru are included in 18 Sedimentary Basins.

Hydrocarbon exploitation in Peru has been developed during 140 years. Productive areas are located in four areas of the territory:

Northern Coast since 1879.

Central Jungle since 1939.

Northern Jungle since 1971.

South Jungle since 2004.

Costa Norte

Peru, Milestones in Hydrocarbon Industry Peru, Milestones in Hydrocarbon Industry

1863: First well drilled in South America, Zorritos Field, Tumbes, Northern Coast.

1869: First well in Negritos, Talara.

1939: First well and production Agua Caliente Field, Central Jungle.

1959: Belco and Peruvian Pacific, first offshore well, Northern Coast.

1971: Discovery of Corrientes Field, North Jungle.

1977: Starts Northperuvian Pipeline Operation.

1984-1986: Discovery of Camisea gas fields.

1993: Establishement of PERUPETRO

2004: Starts production of Camisea Gas Fields.

Discoveries in Peru Discoveries in Peru

0

500

1000

1500

2000

2500

1863-1990 1939-1961 1961-2005 1971-2002 1984-1986 1998

Talara

SelvaCentral

Zócalo

SelvaNorte

Selva SurCamisea

Selva SurPagoreni

Million Oil Barrels Equivalent

As exploration activity increases, new hydrocarbon discoveries appear.

Peru, Oil Historic ProductionPeru, Oil Historic Production

PRODUCCION LIQUIDOS - PERU1879 - 2005

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,00018

79

1883

1887

1891

1895

1899

1903

1907

1911

1915

1919

1923

1927

1931

1935

1939

1943

1947

1951

1955

1959

1963

1967

1971

1975

1979

1983

1987

1991

1995

1999

2003

BO

PD

Costa Zócalo Selva Central y Sur Selva Norte

Present times:

Peru is performing promotion and contracting campaigns in order to intensify the Hydrocarbon Exploration.

Abril, 2008,83 Contratos (64 Ex, 19 Prod)

Dec 31, 2004 31 Contratos (14 Ex, 17 Prod.)

0

22

44

66

88

110

Contratos de Exploración Contratos de Explotación

An evident new virtuous cycle of oil contracting began in 2006.

It is estimated 100 Contracts in force for 2009.

CONTRACTS IN FORCE

Fuente: Elaboración Propia

Area Contratada

18 SEDIMENTARY BASINS

MM Ha MM acres

Total Area 83.3 205.83

Areas Under Contract 37.30 92.50

Areas under Negotiation 2.60 6.44

Intangible Areas 8.53 21.08

Areas under Agreement 7.10 17.61

Available Areas 27.77 68.86

% Free areas for contracting 33.45 %

18 SEDIMENTARY BASINS

MM Ha MM acres

Total Area 83.3 205.83

Areas Under Contract 37.30 92.50

Areas under Negotiation 2.60 6.44

Intangible Areas 8.53 21.08

Areas under Agreement 7.10 17.61

Available Areas 27.77 68.86

% Free areas for contracting 33.45 %

There are 79 contracts in force in Peru and 70 companies working as contractors, within we can mention the following: Petrobras, Repsol,

Pluspetrol, Hunt Oil, Talisman, Perenco, Conoco-Philips,SK Corp., CNPC (Sapet),

Sonatrach, Tecpetrol,

Which Companies Operate in Peru?

Producción Nacional Mil Barriles por Día

0

20

40

60

80

100

120

140

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Petróleo Condensados

Reactivation of drilling and production activities allows to maintain production of mature fields. Start of Camisea Natural Gas Liquids Production in June 2004, overturned the declining tendency of production.

LIQUID HYDROCARBON PRODUCTION

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400

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on

es d

e P

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ía

Talara Talara-Zócalo Aguaytía Camisea

Production – Natural Gas Sales

Production of Camisea Natural Gas originated a sales sustained growth.

Sales of Camisea increased in average 50% per year since 2006, which originated an important change in energy consumption.

PERU – LEGAL FRAMEWORKORGANIC LAW OF HYDROCARBONS

In force and without changes since 1993.

The property right over hydrocarbons is transferred to the Lincensee at the moment of entering into a License Contract.

Contract-Law, ratified by the Ministry of Economy and Finance and the Ministry of Energy and Mines.

License and Services Contracts ruled by private law.

Contract Term of 30 years for Oil and 40 for Gas.

PERU – LEGAL FRAMEWORKORGANIC LAW OF HYDROCARBONS

Contractor tiene libre disponibilidad de los Hidrocaburos y puede exportarlos libre de todo tributo.

La importación de bienes e insumos para la fase de exploración, se encuentra exonerada de todo tributo.

Devolución anticipada del IGV durante la etapa Exploratoria.

El Estado garantiza los regímenes cambiarios y tributarios vigentes a la fecha de celebración del Contrato.

El Banco Central de Reserva garantiza a las Empresas la disponibilidad de divisas

MILESTONES•AGUAYTIA NATURAL GAS PILOT PROJECT

•CAMISEAS NATURAL GAS INTEGRAL PROJECT (Block 88)

•INTEGRATION OF ELECTRICAL GENERATION WITH NATURAL GAS

•OPENING OF NATURAL GAS MARKET

•PAGORENI NATURAL GAS PROJECT (Block 56)

PROJECTS IN EXECUTION

•PROJECT OF LIQUIFIED NATURAL GAS FOR EXPORT

•GAS PIPELINE PROJECTS TO SOUTHERN REGIONS.

DEVELOPMENT OF NATURAL GAS IN PERU

CAMISEA PROJECTCAMISEA PROJECT

ECUADORCOLOMBIA

BRASIL

BO

LIV

IA

CHILE

LimaLima

PERU

Acre

Titicaca LakeREFERENCIASREFERENCIAS

GASODUCTOGASODUCTO

DUCTO LIQUIDOSDUCTO LIQUIDOS

PLANTA PLANTA CRIOGENICACRIOGENICA

PLANTA DEPLANTA DEFRACCIONAMIENTOFRACCIONAMIENTO

GA

SG

AS

LIQUIDOS

LIQUIDOS

CamiseaCamisea

NAFTANAFTAEXPORTACIONEXPORTACION

LPG EXPORTACIONLPG EXPORTACION

LPGLPG

EXPLOITATIONEXPLOITATION Camisea Gas FieldsCamisea Gas Fields

Gas Processing in Malvinas - Gas Processing in Malvinas - CamiseaCamisea

Gas Liquids Fractionation in Gas Liquids Fractionation in the Coast (Pisco)the Coast (Pisco)

Gas Pipeline: Camisea - City Gas Pipeline: Camisea - City Gate in LimaGate in Lima

Gas Liquids Pipeline: Gas Liquids Pipeline: Camisea – PiscoCamisea – Pisco

DISTRIBUTIONDISTRIBUTION

Gas Distribution Network in Gas Distribution Network in Lima and CallaoLima and Callao

TRANSPORTTRANSPORT

PROJECT IN OPERATION SINCE JUNE 2004

Export Project (Perú LNG)

6,1

4,2

TC

FProven and Probable Reserves (at Medium Term)

and Natural Gas Demand (Period 2008 – 2027) Blocks 88, 56, 57, 58 and other

Local Demand (20 Years)

Total 35 TCF

Total 10,3 TCF

Reserves Demand

E C U A D O RC O L O M B IA

B R A S IL

BO

LIV

IA

C H IL E

L im aL im a

P E R U

L a g o T it ic a c a

G A S O D U C T OG A S O D U C T O

P O L ID U C T O P O L ID U C T O

P L A N T A S d e S E P A R A C IO N Y C R IO G É N IC A S

P L A N T A F R A C C IO N A M IE N T O

C A M IS E AC A M IS E A

P L A N T A L N GK m 1 6 9

P is c oP is c o

E C U A D O RC O L O M B IA

B R A S IL

BO

LIV

IA

C H IL E

L im aL im a

P E R U

L a g o T it ic a c a

G A S O D U C T OG A S O D U C T O

P O L ID U C T O P O L ID U C T O

P L A N T A S d e S E P A R A C IO N Y C R IO G É N IC A S

P L A N T A F R A C C IO N A M IE N T O

C A M IS E AC A M IS E A

P L A N T A L N GK m 1 6 9

P is c oP is c o

LNG Project

Operator: PERU LNG

Start of Operation: Year 2010

Status: In construction

Main facilities:

LNG Plant

New Gas Pipeline (Expansion)

Dock and loading facilities

Investment Performed: 2,200 MMUS$

Total Investment: 3,800 MMUS$

A PROMISING FUTURE

As consequence of intensive promotion and international biddings 2006-2008, PERUPETRO will have more that 100 contracts signed in 2009.

At present investments are mainly focused in heavy oil production in the North Jungle and Natural Gas and Condensates production in Camisea and adjacent Blocks.

There will be an important increase of exploration investment in different areas of the country.

CONTRACTED AREAS

GREAT NATURAL GAS POTENTIALGREAT NATURAL GAS POTENTIALCamisea and neighbouring areas, Peruvian

South Jungle

Proven reserves of Natural Gas are 16 TCF, however

the area has a Gas Potential (probable and

possible reserves) of additional 35

TCF.

HEAVY OIL DISCOVERIES

OIL DISCOVERIES IN NORTH JUNGLE

Heavy Oil in North Jungle Development of new areas

Within 500-600 million barrels discovered between 1998-2006 in Blocks 39 and67.

Blocks 39 and 67 partially explored. Potential of additional resources of more than 500 million barrels.

In 1970 and 1980 400 MMB were discovered in Block 1-AB.

TALARA BASIN •Cum. Production:

1,400 MMBO13,200 WELLS

•Production: 30,000+ BOPD

•BASIS FOR THIS STUDY:Potential undiscovered hydrocarbon reserves in both basins:

UP TO 2,000 MMBO(70%+ OFFSHORE)

•.

•First Oil well drilled in 1863.......

TUMBES & TALARA BASINS,

Offshore & Onshore exploration in old and new areas

Proyección Producción Hidrocarburos Líquidos

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Mil

Ba

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Petróleo Condensados Petróleos Pesados Selva Norte

Hydrocarbon Net Export since 2012 year.

Production increase mainly due to heavy oil and Natural Gas Liquids.

Fuente: Elaboración Propia

Liquid Hydrocarbons Estimated Production

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illo

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Petroquímica Exportaciones GNL M.I. Tradicional

In 2004, started commercial production of Camisea Natural Gas.

In 2010, Peru will be the first exporter of liquified natural gas of the region.

ESTIMATED PRODUCTION – NATURAL GAS SALES

Up to 2008, Hydrocarbons represent the 5% of GDP of Peru.

Al thought the world financial crisis it is estimated a GDP growth of 4.0 % in 2009, and 7% in the following years.

Increase of contracts, investment, and future production shall increase participation of hydrocarbons in the GDP up to 8.6% since 2015. Peru is in the way to became a net hydrocarbon exporter in approximately 4 years.

Possibilities to use natural gas in new industries as Petrochemistry, will place Peru as exporter in South America.

The execution of the Liquified Natural Gas Project will place Peru as the most important hub of Pacific - America.

Full force of a competitive contracting scheme, macro economic stability and legal safeguards of the country contribute to the present and future succes.

MUCHAS GRACIAS

THANK YOU VERY MUCH

Daniel Saba De Andrea

www.perupetro.com.pe