Peru Postpones Bidding on Oil Blocks Amid Price Collapse
Peru will hold off on launching an international auction for 25 oil blocks in the first half of 2015 as energy companies grapple with low crude prices, the country's Energy and Mines Ministry said Friday.
The South American nation had planned to open bidding on the rights to develop 19 Amazonian oil blocks and another six offshore blocks in the first half of 2015. But a collapse in the price of oil has sapped interest, Ortiz said.
"I don't believe the conditions will be right, at least in the first half of this year," Ortiz said.
Peru's relatively small oil output rose slightly last year, but the price slump has crimped plans to keep boosting production.
Ortiz said that the government is preparing measures to encourage exploration as oil companies seek to cut costs.
Peru is renegotiating its contract with the consortium PERU LNG, controlled by U.S.-based Hunt Oil, to secure a better reference price for royalties on exports of liquefied natural gas (LNGLF), Ortiz said.
The contract now uses the Henry Hub natural gas index, which has slumped in recent years.
"We have expressed our concerns ... the reference is definitely not favorable," Ortiz said.
Peruvian officials have previously said that PERU LNG avoids paying steeper royalties by shipping LNG to the Gulf of Mexico and then re-exporting it to Asia and Europe at higher prices.
"We have been at the negotiating table with them (Camisea)...for as long as I've been here," said Ortiz, who was named minister in February.
Royal Dutch Shell Plc, SK Energy and Marubeni Corp own minor stakes in PERU LNG.
(Reporting By Marco Aquino, Writing by Mitra Taj; Editing by Alan Crosby
