September 2019 – @alvaroriosroca – The Minister of Economy of Peru has surprised with a very important statement and that hopefully it can become reality in the shortest possible time. “He pointed out that the Southern Gas Pipeline (GSP) is included in the National Infrastructure Plan presented by the Executive and that the financing structure would be modified and would become a co-financed initiative.
Camisea gas has benefited Lima, where a series of incentives and facilities were provided for its implementation. 1) Guarantee of the construction of the main network for transport and distribution of gas in Lima; 2) Price of the molecule with limits until 2018; 3) Free molecule for the first 100,000 residential users; 4) Promotional price for NGV gas for 6 years; 5) Subsidy from the Social Energy Inclusion Fund (FISE) for home connections and much more.
This resulted in a rapid replacement of liquid fuels by natural gas and thermal generation made a big leap and strong price reduction. The natural gas brought to Lima a great economic benefit and of comfort of use especially to the industries, commerce, transporters and also residential users.
The industries in Lima and surrounding areas expanded their facilities to prove the advantages of natural gas and became competitive, conquering international markets and generating a lot of labor.
The GSP was truncated because the project partners were unable to obtain funding due to the corruption scandal uncovered in Odebrecth, the main partner and promoter of the project. The possible corruption in the awarding of the GSP is being investigated and where we can advance (it will be a motive for a next delivery) that the culprits (where there are clearly private agents) are not being investigated and the innocent are suffering unjust investigation and persecution.
On the other hand, the decision to promote the GSP in a kind of Public-Private Association (PPP) where the State can make non-refundable contributions or under another modality is decidedly positive for the South of Peru and for the countries of the Southern Cone.
We believe it is fair to provide incentives and guarantees, as was given to Lima, to reach southern Peru with gas. The benefits are innumerable. In the first place is the redundancy and security of supply to the Peruvian energy and electricity system in the event of any eventuality in the gas pipeline and liquid pipeline to Lima.
Reaching cities and towns in the south of Peru with competitive gas will provide competitive energy to industries, mining, commerce and transportation and will be able to massify natural gas in homes, a situation much demanded by citizens. Let’s remember that there are a series of demands that convulse the area. This would generate productive employment throughout southern Peru and would produce royalties for the state and canon for the natural gas producing area. Peru, with natural gas, would stop importing large quantities of oil and derivatives, thus improving its energy balance.
Reaching the south with natural gas will prevent electricity tariffs from rising in relation to the energy node installed in southern Peru and otherwise end up operating with more expensive fuels. Natural gas reserves are not a problem and at the current rate of consumption Peru has production for 35 years.
Reaching the regional level, the arrival of natural gas from Camisea in southern Peru will allow the possible installation of petrochemical industries and possible export of LNG. Bolivia before any eventuality with its current markets could add to export through the Pacific LNG and add to what Peru would do. The mesh of gas pipelines would extend to the north of Chile where gas pipelines from Argentina already arrive. The Southern Cone could be more integrated with an abundant resource and support for renewable energy and in particular water.
What the Minister of Economy said is the most rational thing we have heard since the GSP had to be cancelled.
*Former Minister of Hydrocarbons and current managing partner of Gas Energy Latin America.