SNMPE: Exploration investment insufficient at US$60mn/yr

The US$60mn annual oil exploration investment in Peru's Amazon region is not enough to find new reserves, newspaper Gestion quoted Carlos del Solar, hydrocarbons VP of the national association of mines, oil and energy ( SNMPE), as saying. The publication of the hydrocarbons law in 1993 encouraged many companies to invest in oil exploration in the Amazon region, but lack of success frightened off investors, he said, adding that exploration had as a result fallen to only two new wells being drilled a year over the last three years at a cost of around US$30mn each. "With this amount [of investment] we are never going to make a large discovery. The hydrocarbons law provided various incentives and several wells were drilled, but unfortunately without success. Between 1990 and 2002, 36 wells were drilled, most of them in the first five years of the 90s," he said. Legislation to promote investment in hydrocarbons exploration, which exempted companies from paying the IVG sales tax and reduced royalty payments, has not been totally successful, he said. The costs of exploration in the jungle are US$10mn-30mn per well, without taking into account the costs of an environmental impact study (EIA) and seismic tests. Peru's state hydrocarbons investment corporation Perupetro, which is in charge of the promotional side, lacked an adequate budget, he said, adding that Spanish oil company Repsol YPF is the only firm currently undertaking exploration, so far without success.