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Report evaluates economic benefits of Camisea Project

The Camisea natural gas project has transformed Peru, reducing energy costs, increasing national revenue and spurring economic growth, according to a study released by Apoyo Consultoría, one of Peru’s leading economic consulting firms.

The firm said in a study commissioned by the IDB that the project will add 0.8 percent annually to Peru’s gross domestic product until 2033, when the life cycle of the project is expected to end.

The Apoyo study focused solely on the economic benefits of the Camisea Gas project.  Additional studies have focused on other aspects, including environmental and social impacts, geotechnical issues involving the gas pipeline, and issues related to the availability of royalties to implement development programs in local communities along its route.

The Camisea fields produce both natural gas and natural gas liquids. The products are transported to the coast for processing and distribution on two separate pipelines. The Apoyo study said that from the time the fields began production through 2033 Peru is expected to consume 5.1 trillion cubic feet of natural gas, and of this amount 77 percent will be dedicated to electricity generation.

Production from the Camisea fields, about 430 kilometers east of Lima, began in June of 2004.  Some 180 industrial clients were added to the Camisea natural gas distribution network by October of 2006. “Industrial consumption has exceeded the expectations of Peru’s Regulator and the concessionaire in both the number of clients and market penetration,” according to the study.

The report said that usage of natural gas by motor vehicles offered “good prospects,” although at the end of 2006 “the demand for natural gas for vehicles exceeded the supply.“ “Nevertheless, with the inauguration of new (natural) gas stations, the liquidity of supply has been re-established,” the report added.

By the end of 2006 a total of 4,900 household customers in Lima had been connected to the natural gas supply network, according to the study. The number of household customers could be increased tenfold through a more vigorous effort in sales and financing and through an adjustment in the rate structure, the report added.

The report said the Camisea project will generate $4.5 billion in fiscal revenues, while the regional government of Cuzco, the region where the Camisea fields are located, will receive $300 million annually in royalties. The report noted that the positive economic effects of the project were broad, applying not only to electricity generation and large industries, but also to consumers, who will be able to reduce their energy costs through the development of a natural gas market. Peru also will be able to reduce hydrocarbon imports by $8.4 billion for the period 2004 to 2033.

The report pointed out that new natural gas distribution and processing projects were now under development using resources from the Camisea fields, including the petrochemical industry, regional pipeline concessions in the center of the country, and the export of liquefied natural gas, a project of the Peru LNG consortium. That latter project will generate about $4.3 billion in foreign exchange and generate $1 billion in fiscal revenue, according to the study.

The Apoyo report addresses the economic impact of the Camisea project. The location of the gas fields in an ecologically sensitive area of the Amazon basin has also led to unprecedented investments in environmental safety and mitigation measures.

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