Hunt Oil, Harken Could Sign Peru Contracts by Year-End

US oil companies Hunt Oil and Harken Energy are negotiating exploration contracts with Peru's state-owned hydrocarbons investment company Perupetro and could sign by year-end, a Perupetro source told BNamericas.

Hunt Oil is interested in Peru's central Marañón basin, while Harken is interested in an area located between the Ucayali and Madre de Dios basins, the source said.

"These are the projects that are closest to signing, we expect to sign something by the end of the year," the source said.

The two could be attracted to Peru by a royalty scheme implemented last year that allows companies to choose between two different royalty mechanisms if and when they make a discovery on their block.

Hunt Oil is developing a project with Korean partner SK Corporation to export liquefied natural gas (LNG) from the Camisea gas project to North America. The project has been held up by a territorial dispute over the location of the proposed LNG liquefaction plant between the provinces of Cañete and Pisco, but the Lima and Ica department heads were expected to sign on October 18 an agreement to resolve the dispute, newspaper Andina reported. The project aims to start exporting LNG in 2007-2008.


US company BPZ Energy is in the process of becoming 100% operator of northern Peru's block Z-1 after US-based Nuevo Energy (NYSE: NEV) relinquished its majority stake in the block when it was acquired by Plains Exploration & Production Company (NYSE: PXP) in May.

Perupetro is waiting for BPZ to inform about its recently announced merger with publicly traded company Colorado-based Navidec in order to approve the transfer of Z-1's operatorship to BPZ, the source said.

Estimated gas potential on Z-1's Corvina and Piedra Redonda structures are 2 trillion cubic feet (tcf). BPZ Energy already owns a 100% stake in block 19, where estimated gas reserves are 0.5tcf. BPZ is developing a project to supply some 200 million cubic feet a day of gas from northern Peru to power generators in Peru and Ecuador.

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