Bloomberg News

Petrotech International Signs Third Peru Offshore Oil Contract

September 20, 2005

Petrotech International, Peru's third-largest crude oil producer, signed a $30 million, seven- year contract to explore for oil and gas off Peru's north coast in the nation's biggest drive to attract investment to the hydrocarbon industry in a decade.

Lima-based Petrotech, which produces crude and natural gas in one northern offshore block, is exploring in two neighboring offshore blocks and will run seismic studies and drill three wells in Block Z-35, a 1.55 million-hectare lot off the Continental Shelf.

Peru aims to sign at least a dozen contracts this year to spur exploration and increase oil production, which dropped 4 percent over the past 12 months to 76,800 barrels a day through August, according to state oil licensing agency Perupetro.

``We made a fundamental oil discovery in Block Z-2B in June, and now we will continue to press south looking for more hydrocarbons,'' Petrotech president William Kallop said in an interview today after the signing. ``If any of these areas prove successful, the amount of investment could run into hundreds of millions.''

Petrotech's oil output rose 2 percent to 11,147 barrels through August, while natural gas production rose 10.3 percent to 17.2 million cubic feet of gas a day. Lima-based Petrotech is owned by Houston-based Fairways Offshore Exploration, which operates in the Gulf of Mexico, Texas and Louisiana.

Peru this year has signed contracts with Houston-based Burlington Resources Inc., South Lake, Texas-based Harken Energy Corp., Calgary-based Connacher Oil and Gas Ltd. and Rio de Janeiro-based Petroleo Brasileiro SA. Pending contracts include Dallas-based Hunt Oil Co., China National Petroleum Corp. and Moscow-based OAO Siberian Oil Co., Perupetro chief executive Antonio Cueto said in an interview.

To contact the reporter on this story: Alex Emery in Lima at aemery1@bloomberg.net

To contact the editor responsible for this story: Laura Zelenko at lzelenko@bloomberg.net


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