Despite Latin America becoming a hot spot for CV19, at least the Loreto province of Peru is on its road to recover.
Also from the region confirmed this information. “We have a tendency for the curve to flatten, and we can be able to face the pandemic in better conditions at the provincial and district levels. In Maynas the situation has been controlled, we are waiting for a second wave of infections,” said Carlos Calampa , regional director. Loreto’s health
Doesn’t mean Peru is back 100%, but I believe it means the worst is over. It will still take many months to fully recover
Hence, I’m calling Peru’s Northern pipeline to resume in first week of June. With Brent prices increasing, oil demand slowly recovering, and Loreto province situation improving, it is now in Peru’s interest to resume oil production. To be ahead of the game, oil production needs to start now. Now! Now!
Update: Peru will have the storage to prepare for oil producers to produce again.
The impact of this measure “is to expand its storage capacity for crude oil from 868.65 MB to 1,116 MB and thus avoid suspending the acquisition of crude oil from local producers and the consequent cessation of production of oil lots that would affect the workers from said producers and the canon and surcharge received by the Tumbes and Piura regions; considering that the effects of the declaration of the State of Emergency result in less commercialization of hydrocarbons at the national level
Iquitos was hit pretty hard. I hope they got a good handle on this. I recall they were short on oxygen tanks, PPE, and doctors. For any activities to restarts in Iquitos, CV19 must be kept under control.
HEADS OF THE MINISTERIAL CABINET
Dispatch of aid and medical equipment for Loreto will be permanent
Commitment and work. That is what the president of the Council of Ministers, Vicente Zeballos, guaranteed in favor of Loreto during his recent visit to this region to carry 12 tons of health aid and to finalize the transfer of 34 doctors in order to join the containment work of the coronavirus.
If the health system continues to improve, a pre-hospital center (Straw Hat) would be closing, where people with no symptoms or mild symptoms were cared for.
Yes, they are getting ready after meeting sanitary protocols.
On the other hand, regarding the cessation of operations of the Nor Peruano Pipeline, Guevara announced that they are also “in the process of restarting, to see the personnel that would enter, to verify the state of health”, which may take “about two weeks” . Regarding the possible risks of contagion for the populations surrounding the pipeline, located in the Amazon, the executive said that “people (stationed at the site) go to the stations and do not move,” but that “the personnel have to pass the quarantine (preventive) before going ”to the area.”
bonus payments required on different tiers of production level
From AIM Admission document
Cost Recovery and Production Sharing “The Contractors will recover quarterly all costs in respect of exploration, development and operation out of 30 per cent. of all petroleum produced within the concession area. To the extent that the value of such cost recovery petroleum exceeds the actual recoverable costs, the value of the excess cost recovery petroleum will be divided between EGPC and the Contractors in accordance with the percentages of production sharing as set out below. The remaining 70 per cent. of the petroleum will be divided between EGPC and the Contractors as follows: EGPC’s share Contractors’ share Crude Oil 82.1% 17.9% Gas and LPG 82.1% 17.9% With respect to the Contractors’ share of the crude oil produced, priority will be given to meet the requirement of the Egyptian market for which EGPC has a preferential right to purchase. With respect to the gas and liquefied petroleum gas produced, priority will be given to meet the requirement of the local market as determined by EGPC. Where EGPC or EGAS is the buyer of the gas sold to the local markets, the sale will be by virtue of a long term gas sales agreement to be entered into between EGPC and the Contractors (as sellers) and EGPC or EGAS (as buyer). Bonus Payment The Abu Sennan Concession provides for certain bonus payments payable to EGPC by the Contractors such as upon approval of each Development Lease and by the relevant Contractor in the event of assignment of its rights and obligations under the Abu Sennan Concession (see below). In addition, the Contractors are obliged to make certain production bonus payments to EGPC upon production reaching certain agreed thresholds.“
“Under the terms of the Crown SPA, and subject to FDP approval, United expects a further $2.85m of net payments during 2020 from the sale of this asset.”
“United has indicated to the Jamaican authorities that it wishes to explore options for continuing to progress what United believe to be a transformative licence. Discussions have been initiated with the Government, and we will update the market in due course.”
It appears that some protocols are being ‘massaged’ so that people can return to work. I anticipate mining and O&G activities to resume very shortly. Peru’s Northern Pipeline had to close and part of the reason is because:
“The directive establishes that no employee over the age of 60 or with serious chronic diseases must work in the high-risk regions of Peru.“
But the Ministry of Energy and Mines (Minem) is already modifying its protocol to allow more employees to return to work.
“According to Ministerial Resolution No. 135-2020-MINEM-DM , it is established that from now on, workers over 65 years of age and those with a BMI of 40 and over will be considered as part of the risk group. With this, the age limit will no longer be from 60, nor the BMI from 30 to more.”
Aside from that, I believe the government will continue to support its O&G industry. Peru is a net importer of oil and gas and will need to attract investments in Peru by taking actions favorable to investors.
Government Support
This is a post from Minem from 2019 expressing government support for O&G activities.
“Eduardo Guevara highlighted that the operation carried out by both companies reflects the confidence of investors in the economic and legal stability of our country.”
“The Peruvian State looks favorably on private investments that support the development of the gas industry in the national territory and supports this type of initiative through the improvements proposed in the new Organic Law on Hydrocarbons (LOH), which is currently in the Congress Energy and Mines Commission; the publication of the Citizen Participation Regulation for the carrying out of Hydrocarbon Activities, in January of this year; and the programming of the necessary resources for the remediation of hydrocarbon environmental liabilities, initiatives that seek to give greater sustainability to long-term investments, he said.
