Hunt-led Consortium Launches Peru LNG Project

The Peru LNG project, the largest industrial project ever to be undertaken in the history of Peru, officially launched today by awarding to Chicago Bridge & Iron Company N.V. (CB&I) the engineering, procurement and construction (EPC) contract for a natural gas liquefaction plant valued in excess of US$1.5 billion. The Notice To Proceed authorization represents a commitment by the international project consortium (consisting of Hunt Oil Company of the United States, SK Corporation of Korea and Repsol YPF of Spain) to move forward with their direct investments to develop the Peru LNG gas export project. Hunt Oil Company will serve as operator of the project.

Peru LNG is a key component in Peru's overall energy plan. Natural gas resources in excess of local demand will be exported as a sustainable commodity for more than two decades with exports expected to commence in mid 2010.

The total cost for the project, including the liquefaction plant, related marine and pipeline facilities and development and financing costs, aggregates approximately $3.8 billion and is the largest foreign direct investment in Peru's history. It has the strong support of the Peruvian government, as it will be an important engine of economic growth and jobs in Peru. Once in operation, Peru LNG is expected to generate roughly $800 million annually of hard currency export revenues. During the construction phase, 35,000 direct and indirect jobs will be generated.

Financing for the project is expected to come from a variety of sources, including the Inter-American Development Bank, with which Peru LNG signed an $800 million mandate letter in July 2006.

"The PLNG project continues to be on schedule with the strong support we are getting from the Peruvian government as well as the confidence we have in the country's stability," said Steve Suellentrop, president of PLNG, "and we anticipate project completion in the first half of 2010 as originally planned."

The EPC contract awarded to CB&I for the LNG plant and marine facilities, valued in excess of $1.5 billion, represents the largest single investment of the project. The entire project is expected to take four years to complete.

CB&I is one of the world's leading EPC companies. The company recently constructed a LNG import facility in the Dominican Republic, hiring and training 90 percent of its workforce from the local population and completing the project without a single recordable injury or lost work day.

"We feel confident that CB&I is the very best company with which we could contract to build the facilities associated with this important project," said Suellentrop. "We look forward to the rapid expansion of the Peru LNG project in the days and months ahead," he said.