Bloomberg News

Ecopetrol’s Peruvian Unit to Complete Natural Gas Project

May 25, 2012

Savia Peru, a joint venture between Colombia’s Ecopetrol SA (ECOPETL) and Korea National Oil Corp., expects to complete a $55 million natural-gas project in Peru this year, part of a plan to triple its oil and gas output in Peru.

The Punta Lagunas project, which will supply north coastal industries such as Vale SA (VALE3)’s Bayovar phosphate mine via a 25- kilometer (16-mile) pipeline, is pending environmental approval from Peru’s Energy Ministry, Vice President Nelson Castaneda said today in an interview at his office in Lima.

The project’s output has 15 potential buyers, Castaneda said. “With 1 trillion cubic feet found so far, this could supply a fertilizer industry, generate electricity and supply cars and homes.”

Ecopetrol, based in Bogota, is investing $2.5 billion to increase production in Peru to 50,000 barrels a day by 2016, which would make it the nation’s largest crude producer ahead of Pluspetrol SA of Argentina and Brazil’s Petroleo Brasileiro SA. Peru has attracted $16 billion in energy investments over the next decade, according the Energy & Mines Ministry.

Savia, which has invested $500 million in Peru since it took over Lima-based Petro-tech Peruana SA in 2009, is spending $219 million this year including an exploratory well in Block Z- 33 off Peru’s south coast, one of the Lima-based company’s 10 coastal exploration blocks. Ecopetrol is exploring five areas in the Amazon jungle with other partners.

Colombian investments

The company may sell crude production from Block Z-2B and other fields to state oil company Petroleos del Peru SA, which is expanding its 62,000 barrel-a-day Talara refinery, Castaneda said. Savia will boost output at Block Z-2B by 20 percent to 17,000 barrels per day this year by drilling 13 development wells and four exploration wells, he said.

Ecopetrol is participating in a drive by Colombia-based energy and mining companies to expand into the region, including Interconexion Electrica SA (ISA), Empresa de Energia de Bogota SA and Pacific Rubiales Energy Corp.

Ecopetrol rose 0.8 percent to 5,300 pesos in Bogota trading. The stock has climbed 26 percent this year, compared with a 14 percent gain by Colombia’s IGBC (IGBC) Index.

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

To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net


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