Peruvian unit of Grupo Energía de Bogotá sees gas project synergies

Peruvian natural gas distributor Contugas is in talks with Transportadora de Gas del Perú (TGP) for the potential joint development of a coastal gas pipeline.

Richard Castillo Zúñiga, CEO of Grupo Energía de Bogotá-controlled Contugas, made the comment during a local energy forum, stating that details have to be defined and that there could be news by the end of next month.

Contugas supplies gas in Ica region and envisions a 550km pipeline leading from Marcona to southern Peru that would cost US$1.2bn and take two years to build.

TGP, which transports Camisea gas to the coast, has proposed a 923km pipeline from Humay, north of Marcona, to the south that would cost US$2bn and also take two years to complete.

Both would be anchored by a petrochemical plant and supply power reserve plants, mining operations and industrial, residential and vehicle offtake.

Contugas and TGP have pitched the projects as an alternative to the Sitgas transport system which would run 1,000km south across the Andes from Cusco, cost upward of US$5bn and take six to eight years to complete.

Castillo highlighted that Contugas currently distributes 20-25Mf³/d while supply capacity is 300Mf³/d, and that dispatch to a petrochemical plant would be 80-100Mf³/d.

Regulatory framework

The executive also touched on the need to have in place a regulation related to the recovery of investment, specifically that the State recognize a residual value at the end of concessions for regional gas distributors.

"What the state would be interpreting is that the concessions have no residual value. What this implies is that in year one, if a concessionaire invests, it will be able to recover its investment, but if the concessionaire invests in year 10 or year 15, it will not have the time to depreciate the assets and recover its investment,” he said.

Castillo explained that concessionaires must present five-year investment plans.

Another issue raised by Castillo involves pricing, and the potential that anchor and large clients may turn to sellers who purchase lower-priced gas destined for export instead of buying gas from a concessionaire.

He said they are working with the State on these two fronts.