SPH: “It is time to approve a package of measures to reactivate the hydrocarbon sector"

Machine translation was used to publish the following SPH release

Lima, July 2024.- The Peruvian Hydrocarbons Society (SPH) asked the Government to include in the Presidential Message for National Holidays a package of measures that allows reactivating investments in the energy sector and promoting the massification of natural gas in the regions.

“We have proposed to the Executive to launch a shock of confidence so that national and foreign investments return to the Peruvian hydrocarbon sector, through a package of reactivation measures that can be implemented in the short term,” said Felipe Cantuarias, president of the SPH.

Energy agenda

The first measure consists of providing predictability and legal security to investments, by reducing the deadlines for obtaining exploration licenses, which, in Peru, can take four years, while in other countries in the region it takes between four. and eight months.

Another urgent measure is the approval of the levelized rate that allows natural gas to be brought to the regions at the same price as in Lima, which will also increase demand and, therefore, the construction of infrastructure in the interior of the country (ducts).

Regarding the reactivation of hydrocarbon exploration projects, the SPH raised the need to promote the bidding for lots on the north coast, which represent 38% of total oil production. Likewise, a new royalty system has been proposed that does not discourage investments.

Stopped investments

According to PeruPetro figures, from January to May 2024, investments in the hydrocarbon sector amounted to US$142 million, of which only US$1 million correspond to exploration, that is, gas and oil reserves are not being replaced. putting the country's energy security at risk.

In that sense, the head of the SPH described it as urgent to continue with natural gas exploration to replenish reserves and have a guaranteed supply horizon for this important resource. “Replenishing reserves is also essential for petrochemical projects to be executed, since it is a condition for investors to have at least 25 years of supply,” he said.

For his part, Álvaro Ríos, former Bolivian Minister of Hydrocarbons, pointed out that if Peru does not make political decisions in time, all progress will be ruined. “Peru could suffer the same fate as Bolivia, which was left without natural gas for not having carried out exploration at the time,” Cantuarias concluded.