Contents

Introduction

Peru's hydrocarbon sector is facing numerous problems. Oil production is 20% below 2014 levels, gas production has remained stagnant for seven years and scarce investments are taking place in development projects. Without investments in exploration, the level of reserves continues to decline and opens serious questions about the future of the sector in the medium and long term.

An absence of investment stimuli, the lack of finds in recent years, scarce geological information of the areas that could go out to tender and delays in obtaining environmental permits are some of the factors that explain the mediocre results of hydrocarbons in Peru. Additionally, political decisions conspire to make the sector less attractive. The most relevant is the repeal of the contracts that the Tullow Oil company had to carry out exploration and development activities in five offshore oil concessions.

To counteract these negative trends, the industry is betting that the new Organic Hydrocarbons Law will be approved in congress shortly. Among the proposed changes, the project plans to extend contract terms as a stimulus to accelerate new investments. There are also plans to conclude the controversial Southern Peru Gas Pipeline and to modernize the Nor Peruano Pipeline, two works that could unlock a series of projects.

In this report we will describe the path that oil and gas production and investment are on in Peru. In addition, we will identify the old and new obstacles that hinder the progress of the sector. We will also analyze the effect of the measures adopted by the government of Martín Vizcarra and the scope of the Organic Hydrocarbons Law project that will be debated in congress. We'll also look at major pipeline and other projects in the country.

Figure: Oil Production

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