SPH welcomes the appointment of Minister Montero and proposes a joint vision to strengthen the hydrocarbon sector

The following is a machine translation of a Peruvian Hydrocarbons Society release

Lima, December 2024.- The Peruvian Hydrocarbons Society (SPH) welcomes the appointment of Jorge Luis Montero Cornejo as the new Minister of Energy and Mines, highlighting his appointment as an opportunity to consolidate the agenda of competitiveness, sustainability and growth of the hydrocarbon sector in Peru.

Felipe Cantuarias, president of the SPH, expressed his confidence that this new administration will be able to mark a milestone in the reactivation of the sector. “The industry faces important challenges, mainly due to the lack of investment in the exploration of new oil and natural gas reserves, but we are also facing a great opportunity to reverse this situation. Investment in hydrocarbons until August 2024 reached US$337 million, of which only US$32 million were allocated to exploration. “It is crucial to generate new reserves to ensure the country's energy future,” he said.

In addition, Cantuarias pointed out that oil production remains below 40 thousand barrels per day (MBPD), reaching only 37 MBPD in October. “Currently, we produce only 25% of the crude oil we need, which forces us to depend on imports and increases costs for all Peruvians. This situation must be reversed with concrete and timely measures,” he added.

Implementation of Measures

The SPH considers that this situation represents a challenge and an opportunity to implement a set of measures that stimulate investment and generate a “shock of confidence” in the sector. Among the proposed priorities, the popularization of natural gas through a level tariff stands out, as well as projects for the popularization of natural gas through concessions and transportation pipelines, which will allow democratizing access to cheaper and cleaner energy, balancing prices between Lima and the regions.

The new administration is also expected to boost the development of the petrochemical industry in the south of the country, a key driver for economic growth and energy diversification. Another crucial point is to guarantee the safe and efficient operation of the North Peruvian Pipeline, a strategic infrastructure for transporting crude oil from the jungle to the coast.

Furthermore, it is considered essential to simplify administrative procedures through reforms to exploration and exploitation regulations, encouraging offshore projects and maximising the value of the country's hydrocarbon potential.

Cantuarias stressed that natural gas plays a key role in the energy transition, as it is a cleaner and more efficient resource that contributes to the reduction of emissions and the diversification of the energy matrix. Its development not only promotes environmental sustainability, but also enhances the country's natural resources, promoting economic growth.

Commitment and Collaboration

The president of the SPH highlighted the need to strengthen legal security and predictability in the sector, factors that he considers essential to create a reliable environment, reduce risks and position Peru as an attractive destination for investments in hydrocarbons.

“At SPH, we reaffirm our commitment to work closely with the new minister and the authorities to implement a package of measures that will boost the development of the sector. We fully trust in Jorge Luis Montero's leadership to guide Peru towards a prosperous and sustainable energy future,” Cantuarias concluded.