Hunt Oil and SK Corporation currently own the Peru LNG project. The new agreement brings Repsol YPF into the project as a third participant. Peru LNG will build, own and operate a liquefaction facility at Pampa Melchorita (Peru). That plant is expected to be operational in 2009 and will produce 4.0 mmtpa of LNG for delivery to the west coast of North and Central America.
The Camisea fields will supply the natural gas for Peru LNG from block 88 and block 56 in central Peru. The Memorandum Of Understanding also contemplates Repsol YPF taking a stake in Transportadora de Gas del Peru SA (TGP), the company that delivers natural gas and natural gas liquids from the Camisea area via a trans-Andean pipeline.
This operation builds upon the lines of activity outlined in Repsol YPF's 2005-2009 Strategic Plan, and which contemplates growth in upstream and increasing the company's presence in those area and businesses where there are high levels of profitability, such as the integrated LNG businesses in the Pacific Basin.
Repsol YPF's Strategic Plan also contemplates the company increasing its commitment with respect to the assets related to the production of natural gas, especially LNG, in the integrated projects of Gassi Touil (Algeria), Persian LNG (Iran), and the Caribbean (Venezuela and Trinidad & Tobago). Repsol YPF will take advantage of business opportunities and economies of scale resulting from the Gas Natural SDG joint venture, which will become the third largest LNG operator in the world, and will generate for Repsol YPF 10 million dollars per year in cost savings.
Annex I: Peru LNG specifics
The Peru LNG Project has already signed agreements to purchase 620 MMCFD of gas from the consortium of companies that constitute the upstream license holders in the Greater Camisea area of Peru. The term of purchase agreements, which begin upon completion of the construction of the liquefaction plant in Peru, is for 18 years.
Once the natural gas produced from the Greater Camisea fields (to be supplied primarily from Block 56) is converted into LNG, the LNG will be exported by ship to re-gasification facilities to be built by purchasers of Peru's LNG. Peru LNG is in advanced stages of negotiations with a number of potential purchasers and anticipates that final decisions associated with these negotiations will be made in the near future.
The project requires a plant and related marine facilities to export the LNG. Some of the major components of the plant include: A unit for the reception and processing of natural gas; Tanks to store the LNG; Port facilities to load the LNG onto ships, including associated piping and a breakwater to create an area of calm water suitable for marine loading operations; Administrative facilities, maintenance shops and warehouses; Housing facilities for workers and associated sewage treatment.
Plant operation will involve the following: Natural gas will arrive at the plant through a branch pipeline from the Camisea-Lima gas pipeline; The natural gas will be converted into liquefied natural gas by cooling it to a temperature of minus 163 ° Celsius; The liquefied natural gas (LNG) will be stored in tanks until loaded onto LNG transport vessels and shipped by sea approximately every 5 days; Maintenance of the plant and associated port facilities will be carried out on a continual basis; The plant will be operated by trained personnel in accordance with applicable regulations and standards to minimize risks to personnel, the public, and the environment. The plant is projected to operate for a minimum of 20 years.
The plant will be self sufficient for its water and electricity requirements. Natural gas powered turbine generators will provide electric power and a seawater desalination plant will provide process and potable water. During the first year of construction, while the desalination plant is being built, water from the lower reaches of the Caņete River will be used to control dust that could be generated during ground preparation. Bottled water will be used for drinking. All liquid or solid waste generated will be adequately treated prior to final disposal. Additionally, fire fighting, flare and venting systems will provide the necessary safety protection in case of a plant upset or emergency during start-up and operation.
Per LNG has completed comprehensive studies of the physical, biological and social aspects in and around the area of the proposed LNG facility. Peruvian residents provided comments on the EIA through Peru's Ministry of Energy and Mines' public consultation and hearing process.
Annex II: Peru LNG plant location - Pampa Melchorita
Located in a remote area of Peru, Camisea contains approximately 13 TCF of gas with significant associated liquids. The consortium has been awarded the contract to construct and operate the transportation system (i. e. the downstream portion of the project) to move Camisea gas and associated liquids to market. This includes the construction of a 700 km gas pipeline from the Camisea fields to the city of Lima and a 575 km liquids export line.
As far as the liquefaction terminal, the site originally selected was Pampa Clarita, located 154 kilometers south of Lima. Detailed engineering studies revealed that the site offered the most technically favorable conditions. However, results from an archeological study revealed an important cultural development: An archaeological site evaluation led to the discovery of the mummified remains of a two-year old boy that had lain under Pampa Clarita for an estimated 500 years. In an effort to avoid disruption of the area's rich cultural heritage, the decision was made to discard Pampa Clarita as a possible site.
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