Skip to content

SOUTH AMERICAN ENERGY MARKETS DAILY ROUNDUP (May 6, 2009): Peru’s energy regulator Osinergmin is worried about future gas supplies

May 6, 2009

South American Energy Markets (SAEM) publishes a daily roundup of the top-five stories affecting energy markets in the region with links. The roundup includes all the major web dailies of South America and other websites that write about the region’s energy markets. SAEM Daily Roundup appears from Monday through Friday and is published by noon London time.

Wednesday, May 6, 2009


Due to rocketing demand and cheap wellhead prices, Peru’s gas and power shortages are placing more pressure on the country to prove up reserves and raise power tariffs. Lima-based daily La Republica writes that there is concern by energy regulator Osinergmin over weather there will be enough gas to supply the domestic market. Osingermin president, Alfredo Dammert, stated that uncertainty over the availability of future gas supplies is putting into question new power investment projects as well.  “Diesel costs between $10 and $12/million Btu,” he said. “Gas in the jungle [region] is already sold at $1.50/million Btu and in 2011 we are going to export it to Mexico at $0.16/million Btu,” said Herra Descalzi, former energy minister. COMMENT: Rocketing gas demand, due to cheap $1-$2/million Btu prices, is becoming an untenable problem for the country. One of the solutions that the government is seeking is lowering gas supplies to Peru LNG, when it becomes operational in 2010. Peru has two choices: (1) raise wellhead prices to curb demand; or (2) prove up reserves – or bust. 


Spanish energy major Repsol said it plans to invest up to $6 billion in Peru during the next five years, writes state-owned news agency Andina. Repsol Chief Executive Antonio Brufau, who met this week with President Alan Garcia, praised Peru’s investment laws. After Spain and Argentina, Peru receives the most investments today from the energy company. COMMENT: After Repsol’s failure in Bolivia with the $6 billion Pacific LNG project, which was Peru LNG’s rival, the Spanish major has found good prospects for growth in Peru if new gas reserves are discovered.  


Economy and finance minister, Ali Rodriguez Araque, said that Venezuela will become in a few years time an important gas player, reports The announcement was made after President Hugo Chavez inaugurated the country’s first non-associated offshore gas well 100km off the coast of the state of Sucre. The well will initially produce 22 million cu ft/day  and eventually rise to 70 million cu ft/day. COMMENT: Even though Venezuela has a lot of gas, its geographic location in South America has kept it in the flyweight leagues. The country is attempting to overcome its geographic constraints by building the Mariscal Sucre liquefaction plant that will come onstream in the next decade. The impact of lower global prices may, however, delay such plans. 


The new Gas Law, which is supposed to increase competition at the cost of Petrobras’ dominant market role, has encouraged private investors to study the possibility of building a $1.25 billion LNG regasification terminal in the southern Brazilian state of Rio Grande do Sul, writes The new regas terminal, which is being spearheaded by Gasenergy New Ventures, plans to also build a 1GW thermal power plant that would be supplied by the future LNG regas terminal.  COMMENT: It is a positive matter that the country’s gas sector is seeing new players. In theory, the Gas Law encourages competition. Let’s see how this works in practice. 


Uruguay’s ever-worsening drought in the north of the country, where all of its hydropower generation plants are located, is forcing state-owned energy company UTE to raise electricity tariffs, reports Montevideo daily El Pais. Jose Luis Pou, secretary general of the industrial energy consumers Agcel, said that it would be “correct, reasonable and recommendable to ask the population to restrict power consumption.” He said that the public sector should be the one setting the example. Uruguay, which imports about one third of its power needs, paid a costly $500 million last year for such supplies. COMMENT: The drought in northern Uruguay has also affected hydropower generation in southern Brazil, where water levels  at dams are at 38%, according to power market operator ONS. Matters in Uruguay will get worse and will impact economic growth due to the expensive cost and shortage of power supplies.

These briefs can be reprinted as long as the source is cited.

If you have any feedback on today’s articles, or if there are energy industry stories you think should be covered, or need research assistance, please contact

No comments yet

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: