PERU NEWS

At an event that took place in London on March 6th Daniel Saba, the Chairman of Perupetro, Peru’s hydrocarbon investment promotion company, announced the 2008 bidding round for 16 new exploration contracts in the Marañon, Huallaga, Lima-Pisco and Titicaca basins. Last year's bidding round process was highly successful with 14 of 19 blocks granted in licence to energy companies from Europe, Asia, North America and South America. The total number of contacts signed that year was a record breaking 24, resulting in commitments for an estimated US$ 1 billion in exploration and exploitation in different sectors of Peru. During the event Chairman Saba granted us a few moments to comment on this year’s process.

PERU NEWS: Considering how successful last year’s bidding round was, what are your expectations for this year?

DANIEL SABA: I anticipate that we will be at least as successful as last year. We have to consider that the current international context favours development of Peru’s hydrocarbon sector. Just last week oil prices surpassed US $100 dollars per barrel and it looks like prices will be kept high in the following year. This generates interest among companies who are looking for new exploration opportunities, which is what the bidding round can grant them. Overall I would say our perspectives are very positive, although we should also consider that the number of blocks being offered this year is lower than last year.

PN: This is the second year in a row that Perupetro brings a high level delegation to London to present the bidding round. Why is London in particular such a strategic venue for attracting investment?

DS: As one of the major financial centres of the world London is a great place to present the opportunities Peru offers. There are many capital raising enterprises here that either have or manage hydrocarbon investment portfolios. You can understand that for us it is crucial to be able to fill up a room at our events and in London we can do that. In both last year’s and this year’s presentations we have had a good level of attendance and have been able to generate interest. Perenco, for example, is a company that we met last year for the first time and which now operates in Peru. Both our visits have also included participation in the AAPG Prospect and Property Expo (APPEX), which took place in London this week and which gathers companies looking for explorations opportunities and those offering them.

PN: So far this year Perupetro has presented in Japan, the U.S. and now London. Which other countries do you consider important to visit?

DS: Well Canada for us is always important as it has been such a major investor in Peru. We also have the possibility of visiting China which we hope to do. During last year’s bidding round the biggest surprise for us was the high number of Chinese companies that presented their envelopes (with their bid) for specific blocks. Some of these companies that participated had not even expressed their interest to us previously so it was quite a surprise.

PN: Why do you think Peru is so successful in attracting investment in the hydrocarbon sector?

DS: There are several keys to Peru’s success. One of them has been the recent discoveries of important reserves made by some of the companies operating the blocks. US based Barrett Resources recently discovered reserves possibly equivalent to 100,000 barrels and Repsol has also announced discoveries. With regards to natural gas, there has been a further recent discovery in the Camisea block, increasing the export potential. One key factor has been Peru’s high level of stability and security, which is always important for attracting investment. Finally, we have to credit the international surge in oil prices, which is accompanied of greater interest by the companies.