CNPC says it will invest $2 billion in Peru

Updated: 2014-06-02 04:51

By JACK FREIFELDER in New York (China Daily Latin America)

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As part of the China National Petroleum Corporation's (CNPC) search to expand its overseas assets, the company has announced plans to spend a minimum of $2 billion in Peru over the next decade, according to a CNPC official.

Gong Bencai, head of CNPC's Latin America division, said the company's goals in the Latin American nation would involve efforts "to acquire companies" and "participate in the bidding of oil fields".

"We are looking for more opportunities in Peru," Bencai said in an interview with Reuters. He also said the company is looking for new natural gas blocks in Venezuela, but declined to give further details.

In November 2013, CNPC made a $2.6 billion deal with Brazilian state-run oil company Petrobras (Petroleo Brasileiro SA) to acquire all of its Peruvian assets.

The deal, conducted through CNPC's subsidiary PetroChina and Petrobras' Peruvian branch (Petrobras Energia Peru SA), includes the sale of two blocks with complete ownership and one block with a 46-percent ownership stake, according to a press release.

Petrobras has said that the divestiture of its Peruvian assets is part of a broader plan aimed at offloading foreign assets for the sake of focusing on offshore domestic deposits.

Claudia Bustamante, a spokeswoman for CNPC, told Reuters in April that the deal between CNPC and Petrobras could receive approval by the end of May.

CNPC — one of China's two main oil and gas companies, along with Sinopec — has its headquarters in Beijing and is the parent company of PetroChina. Its businesses cover new energy development, natural gas and pipelines, and petroleum exploration and production.

PetroChina, which was founded in 1999, 11 years after CNPC, is the Hong Kong, New York and Shanghai-listed subsidiary of CNPC.

Petrobras, with headquarters in Rio de Janerio, is one of the largest oil companies in Latin America, with holdings throughout the oil and gas production chain. The organization also employs more than 85,000 employees in 17 countries.

PetroChina and CNPC could not be reached for comment.

As of 2011, China held stakes in oil and gas ventures in Argentina, Brazil, Bolivia, Canada, Colombia, Cuba, Ecuador, Peru, the US and Venezuela, according to a January 2014 report from the Energy Information Administration (EIA), a branch of the US Department of Energy.

Since 2009, China has spent $59 billion on the acquisition of oil and gas assets in the Americas, the report said.

CNPC, which works in more than 30 countries, also has operations in a number of Latin American countries, including Brazil, Colombia, Costa Rica, Cuba, Ecuador and Venezuela.

In April, Peru approved an environmental permit that allows CNPC to set up wells, plan seismic surveys, and conduct other upstream operations in the region where the gas blocks are located. The sum for the exploratory work in the area totals $1.39 billion.

All of these developments involving China coincide with the approaching vote on the Camisea Gas Pipeline.

Peruvian President Ollanta Humala has outlined an $11.5 billion plan to modernize the energy infrastructure in Peru. His plan has three parts: $4 billion toward the construction of power plants, a $3.5 billion petrochemicals factory and a $4 billion natural gas pipeline.

Once completed, the pipeline would transport natural gas from central Peru to thermoelectric plants on the Pacific coast of Peru.

Gong, CNPC's official in Latin America, said his company is "very interested in the southern pipeline".

Jorge Merino, head of the Peruvian Ministry of Energy and Mines, told Reuters in February that bidding was pushed back from October to June because investors needed more time to prepare offers.

Bidding for the rights to build the 1,000-mile pipeline will take place on June 30.