Peru Government Awards 13 New Oil and Gas Blocks

LIMA Jul 12, 2007 (Dow Jones Newswires)

Peru awarded 13 new oil and gas blocks Thursday to nine different bidders in a process lauded by company and government representatives.

Companies have offered royalties that "range from the minimum to more than 60%. This has been an extremely successful process," Energy and Mines Minister Juan Valdivia said on the sidelines of the ceremony to award the blocks.

Earlier, Valdivia said the 13 blocks represent more than $1 billion in investment in exploration.

The blocks went to a wide variety of companies including U.S.-based Hunt Oil and South Korea's SK Corp. (003600.SE).

Other winners included Russia's Samaraneftegaz; Irish Pan Andean Resources PLC; and PetroVietnam Exploration and Production Company.

A consortium made up of Canada's Talisman Energy Inc. (TLM) and Colombian state oil company Ecopetrol obtained another block.

"Some of the biggest companies in the world bid for these blocks. We are extremely pleased with the results," said Daniel Saba, head of state licensing company Perupetro.

The six blocks that failed to garner any interest in this round of bidding will be offered again early next year, said Saba.

Mauricio Gonzalez, general manager of Pan Andean's Peru branch, was upbeat about the fact his company won two blocks in the process.

"This has been a totally transparent process. There were no information barriers. This has been an exemplary process and we are very pleased to have won two blocks," Gonzalez said after the ceremony.

The company is already operating in block 114, where it plans to spud its first well next March.

Pan Andean won one block near block 114 in central Peru and another block in southern Peru in the Titicaca basin.

According to Gonzalez the company has spent several million dollars exploring this year.

"In 2008 it will be much higher. We expect the well to cost roughly $15 million," he said.

The Peruvian government has made a concerted effort to drum up interest in Peru's flagging oil sector in recent years and has managed to attract significant investment after making contracts more flexible and attractive.

In 2006, for example, the government signed a record 16 new exploration and production contracts.

Copyright (c) 2007 Dow Jones & Company, Inc.

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