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Gasoducto Sur Peruano en Calgary

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Presentación que hizo ProInversión en Calgary (14/10/13) en el roadshow “In Perú, it is possible to invest”.

En el nuevo diseño del Gasoducto del Sur, presentado por Wood Mackenzie y Foster Wheeler Energy, ya no habrá ningún tramo realizado por la empresa TGP, sino que se licitará el "loop de la selva", desde Malvinas hasta Chiquintirca (Ayacucho) y que este gasoducto ya no será de 32 pulgadas como se señalaba antes, sino de 36 pulgadas.

Tampoco contempla un poliducto de Malvinas al sur como estipula la Ley N° 29970, sólo el gasoducto de 32 pulgadas.

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Gasoducto Sur Peruano en Calgary

  1. 1. ENERGY SECURITY AND SOUTH PERUVIAN GAS PIPELINE PROJECTS October 2013
  2. 2. Why we are here today ProInversión, the promotion arm of Peru Government, seeks investors to help construct and operate new natural gas and gas liquids pipeline infrastructure as well as new power generation facilities in Peru. Four concessions are envisaged: • • • Two separate concessions of 500MW (+ or – 20%) each of diesel-fired generation in the southern coastal region (the Energy Node), to be connected to the natural gas pipeline once gas is available Gasoducto Sur Peruano (GSP), a natural gas pipeline from the existing TGP system to these power generation facilities in the south as well as to other consumers such as potential petrochemicals The “Energy Security Project” – additional natural gas and gas liquids pipeline capacity from the Camisea region to Chiquintirca to improve reliability of the overall system Today we will discuss each of these projects, their economic, strategic rationale and key technical, financial, and contractual considerations 2
  3. 3. 1. Project background 2. Project description 3. Technical considerations 4. Contract considerations 5. Q&A
  4. 4. Project Background: Strong growth in Peruvian energy production Domestic production of hydrocarbons has increased roughly 16% p.a. since 2006 while the consumption of natural gas has increased 37% p.a. Peru Energy Historical Resource Production Crude Natural Gas 300 CAGR (06-12): 16% 250 • Since 2008 the average GDP growth has roughly been 6.5% p.a. KBOE 200 • As of 2012, the gas demand is broken out in the following way: • Peru LNG (56%) • Power (27%) • Industrial (10%) • GNV (5%) • Residential (1%) 150 100 50 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 - Source: MINEM 4
  5. 5. Project Background: Power generation in Peru is divided into three zones Hydroelectric Northern Zone Solar Total Installed Capacity (MW): 433 356 788 Effective Capacity (MW): Annual Production (GWh): 454 327 781 2,462 820 3,282 395 62 457 Peak Demand (MW) : Hydroelectric Central Zone Thermal Thermal Solar Total Installed Capacity (MW): 2,384 3,409 5,793 Effective Capacity (MW): Annual Production (GWh): 2,258 3,155 5,413 15,734 14,884 30,618 2,102 2,253 4,355 Peak Demand (MW) : Hydroelectric Thermal Solar Total Installed Capacity (MW): Southern Zone 428 527 84 1,039 Effective Capacity (MW): Annual Production (GWh): 428 415 80 923 2,652 709 60 3,421 345 133 Peak Demand (MW) : Hydroelectric Thermal 479 Solar Total Installed Capacity (MW): Peru Total 3,244 4,292 84 7,620 Effective Capacity (MW): Annual Production (GWh): 3,140 3,897 80 7,117 20,849 16,413 60 37,321 2,843 2,448 Peak Demand (MW) : 5,291 Source: COES Operational Statistics 2012 5
  6. 6. Project Background: The central region generates the majority of Peru’s power Growth in power generation in Peru since 2006 has averaged roughly 9% p.a. Installed Generation Capacity and Power Generation by Region in Peru North Central South Total - Effective Capacity (MW) 8,000 40,000 7,000 CAGR (‘06-’12): 9.1% 30,000 6,000 25,000 5,000 20,000 4,000 15,000 3,000 10,000 2,000 5,000 1,000 Effective Capacity (MW) Power Generation (GWh) 35,000 - 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: COES Operational Statistics 2012 6
  7. 7. Project Background: The power sector is driving growth in natural gas consumption Natural gas demand is expected to grow significantly, led by the power sector Peru Natural Gas Demand Forecast (2013 – 2033) LNG Other Users - North 2,500 Possible Future LNG Electricity - South Electricity - North Other Users - South NGV - North CAGR (’20-’33): 2.5% 2,000 MMCFD CAGR (’12-’20): 5.1% 1,500 1,000 500 0 2012 2015 2018 2021 2024 2027 2030 2033 Source: Wood Mackenzie’s analysis, COES 7
  8. 8. Project Background: Highly prospective plays expected to meet future growth There are a number of highly prospective plays in Peru that will provide the resources to meet continued demand growth in natural gas First exploratory well is expected to be drilled in block 76 in 2015, Prospective reserves of around 2-3 tcf are expected Reserves Natural Gas (TCF) Natural Gas Liquids (MMbbl) Block Proved (1P) 2P1 Proved (1P) 2P1 56 3.0 4.0 216.8 293.4 57 0.6 2.5 30.8 132.3 58 0.0 2.3 0.0 135.9 88 10.3 11.9 515.1 614.7 Total 14 21 763 1,176 Source: COES Operational Statistics 2012; Note: 2P is inclusive of 1P 8
  9. 9. Project Background: Reserves outlook vs. demand outlook Peru has more than enough reserves to meet the expected domestic demand for the next 30+ years Demand Outlook (2013-2050) - tcf 22 20 18 16 14 12 10 8 6 4 2 0 Demand 19 20 2 21 6 13 9 4 LNG Electricity Other Electricity Other demand - users - demand - users North North South South Reserves Outlook (2013-2050) - tcf 22 20 18 16 14 12 10 8 6 4 2 0 21 Probable reserves Proved reserves 17 14 12 It is expected that additional reserves will be found and developed as demand expands and infrastructure bottlenecks are removed Block 56 Block 57 Block 58 Block 88 9
  10. 10. Project Background: Infrastructure investment needed to meet growing gas production The TGP expansion and the construction of Gasoducto Sur Peruano will drive further development of the Camisea basin Peru Natural Gas production forecast It is expected that additional reserves will be developed to reverse the expected fall in production 2500 mmcfd 2000 Production is based on 1P reserves 1500 1000 500 PLNG TGP Gas TGP Gas - Expansion GSP - Aprox. Capacity 2032 2030 2028 2026 2024 2022 2020 2018 2016 2014 2012 2010 2008 2006 2004 2002 2000 0 Production Source: MINEM, Wood Mackenzie 2013, Upstream Services; Includes blocks: 56, 57, 58, 88 (Block 76 could be incorporated in the future) 10
  11. 11. Project Background: Added take-away capacity also needed in NGLs Like natural gas, current natural gas liquids production is infrastructure limited NGL Production and Takeaway Capacity 200 It is expected that additional reserves will be developed to reverse the expected fall in production 180 160 140 Production is based on 1P reserves Kb/d 120 100 80 60 40 20 TGP - NGL TGP - NGL - Expansion 2032 2030 2028 2026 2024 2022 2020 2018 2016 2014 2012 2010 2008 2006 2004 0 Production Source: Wood Mackenzie 2013, Upstream Services; Includes blocks: 56, 57, 58, 88 (Block 76 could be incorporated in the future) 11
  12. 12. 1. Project background 2. Project description 3. Technical considerations 4. Contract considerations 5. Q&A
  13. 13. Project Description: Energy infrastructure projects proposed Energy Security and Gasoducto Sur Peruano Projects BRASIL MALVINAS LIMA (Lurín) Pampa Melchorita PISCO Km 73 Km 127 Loop TGP HUANCAVELICA ICA QUILLABAMBA CHIQUINTIRC A HUMAY ANT A APURIMAC ABANCAY AYACUCHO MADRE DE DIOS ZONA DE SEGURIDAD ENERGÉTICA CUSCO CUSCO ESPINAR MARCONA PUNO JULIACA AREQUIPA ACTUALES TGP (SISTEMA ACTUAL + LOOP COSTA) Gasoducto / Poliducto CONTUGAS (SISTEMA ACTUAL) PERU LNG (GASODUCTO) PUNO LAGO TITICACA AREQUIPA MOQUEGUA PROYECTADOS GASODUCTO DE SEGURIDAD ENERGÉTICA POLIDUCTO DE SEGURIDAD ENERGÉTICA GASODUCTO SUR PERUANO ZONA DE UBICACIÓN DEL POLO PETROQUÍMICO Y DEL NODO ENERGÉTICO TACNA BOLIVIA CHILE 13
  14. 14. Project Background: Strategic rationale 1 Energy security Historical failures of the TGP system has had a large financial impact on the country’s economics (~$400,000/day) Sense of vulnerability as ~50% of the power produced in Lima depends on a single supply line 2 Resolve Infrastructure constraints 500 MMcf/d of gas is being re-injected due to limitations in midstream gas processing and downstream markets 3 Address Socio/Economic Issues Trigger economic development in Southern Peru and address demographic concentration 4 Remedy Regional Power Generation Disparities ~60% of power consumed in the south is generated in the north while demand for peak power in the south is growing 14
  15. 15. Project Description: Energy Node & Gasoducto Sur Peruano c The GSP sections from the Point of Connection (PC) to Mollendo/Ilo which includes: Section a1: Gas pipeline from the PC to the province of Anta Section a2: Gas pipeline from the province of Anta to Mollendo/Ilo Section b: Gas and liquids pipeline from the separation plant at Malvinas to the PC Section c: Gas and liquids pipeline from the PC to the compression plant at Chiquintirca (km 211) Chiquintirca b MALVINAS PC QUILLABAMBA ANTA a1 Existing Liquids Pipeline Gas Pipeline URCOS APURÍMAC AREQUIPA PUNO a2 MOLLENDO ILO TACNA 15
  16. 16. 1. Project background 2. Project description 3. Technical considerations 4. Contract considerations 5. Q&A
  17. 17. Technical Considerations: Existing TGP pipeline (NG and NGL) has limited capacity Existing Transmission System – Natural Gas TgP NG Maximum Operating Capacity with current configuration : 1230 MMSCFD Km 211: Chiquintirca Compression Station 32” Arrival Pressure: 70 barg Km 127: Kepashiato Intermediate Compression Station in construction to increase capacity to 1,500 MMCFD 32” Km 0: Malvinas Plant Capacity 2000 MMCFD Discharge Pressure: 147 barg Existing Transmission System –Natural Gas Liquids TgP NGL Maximum Operating Capacity with current configuration: 110 MBPD Km 210: Chiquintirca PS3 Inlet Pressure: 7 barg 14” Km 108: PS2 Suction Pressure : 16 barg Discharge Pressure : varies with flow rate 14” Km 0: PS1 Discharge Pressure: 24 barg 17
  18. 18. Technical Considerations: The pipelines have a number of technical complexities 1 Protected Areas The environmental impact is the most onerous During construction phase 2 Archaeological Issues Numerous archaeological sites in Peru - possibility finding archaeological artefacts during construction 3 Seismic Areas Pipeline stability protection solutions should be given to protect the pipeline from movements caused by difficult terrains that need to be traversed 4 Terrain Difficulties Terrain traverses from low to high altitude locations with dramatic slopes that need to be considered; there will be a requirement for slope protection Right of Way (RoW) Issues RoW located in jungle, mountain, costal desert where isolated tribes need to be considered for safety and security issues. There will be logistical requirements to avoid issues because of proximity to communities 5 18
  19. 19. Technical Considerations: Energy Security Recommendation Schematic Future Transmission System – Natural Gas MMCFD TgP NG expected Maximum Operating Capacity with current configuration 1230 Energy Security Maximum Operating Capacity (0-73km/73-211km): Existing New Km 127: 2000/1500 Km 211: Chinquintirca Compression Station Arrival Pressure: 70 barg 32” 36” Kepashiato Intermediate Compression Station to increase capacity to 1,500 MMCFD 32” 36” 32” Km 73: Derivation Point 36” Km 0: Malvinas Plant Capacity 2000 MMCFD Discharge Pressure: 147 barg Future Transmission System –Natural Gas Liquids KBD TgP NGL Maximum Operating Capacity (with DRA): Energy Security Maximum Operating Capacity/Design of new (without DRA) : Existing with DRA New 14” Km 210: Chinquintirca PS3 Km 108: PS2 24” Inlet Pressure: 7 barg 130 130 14” Km TBD: PS2 (New) Km 0: PS1 24” Km 0: PS1 (New) Note: 1) Design capacity is expected to be 10% above operating capacity 19
  20. 20. Technical Considerations: Energy Security Recommended Installations Energy Security Loop Overview – Recommended Option Product Recommendation Natural Gas • • • 36” NG Loop from Las Malvinas Separation Plant to Chinquintirca 4 Scrapper Facilities 8 section valves Natural Gas Liquids • • • • 24” NGL Loop from Las Malvinas Separation Plant to Chinquintirca 4 Scrapper Facilities 10 section valves 2 New pumping stations at Las Malvinas Plant close by to Derivation Point Full System • 2 new control rooms 20
  21. 21. Technical Considerations: Energy Security CAPEX Estimate Energy Security Loop CAPEX Estimate Estimated Total CAPEX : $981,000,000 Cost Breakout Basic Engineering / Feed Surveys Detailed Engineering and Project Management Materials - Line Pipe, Major Valves, etc. Cost ($) Excluded 8,000,000 42,000,000 370,000,000 Compression and Equipment 17,000,000 Controls : Field Instruments, Sub-Systems, Bulks, SCADA and RTU 19,000,000 Buildings 41,000,000 Construction Works 484,000,000 21
  22. 22. Technical Considerations: Gasoducto Sur Peruano Recommendation Schematic Gasoducto Sur Peruano System Km 211: Chinquintirca Compression Station Arrival Pressure: 70 barg 32” 36” Km 127: Kepashiato Intermediate Compression Station to increase capacity to 1,500 MMCFD Quillabamba: 50 MMscfd 32” 14” URCOS 32” Mollendo: 275 MMCFD 24” 32” 36” Km 73: Derivation Point 32” 36” GSP Flow Rates Km 0: Malvinas Plant Capacity 2000 MMCFD Discharge Pressure: 147 barg MMCFD: Inlet of system1 Quillabamba (Power) Mollendo (Petrochemicals) Mollendo (Power) Ilo (Petrochemicals) Ilo (Power) : 500 : 50 : 50 : 175 : 50 : 175 Km762 24” Ilo: 175 MMCFD TgP existing NG Pipeline NG new Security Pipeline Gasoducto Sur Peruano Note: 1) Design capacity is expected to be 10% above operating capacity 22
  23. 23. Technical Considerations: Gasoducto Sur Peruano Recommended Installations Gasoducto Sur Peruano Overview – Recommended Option Product Natural Gas Recommendation • • • • • 32” from Point of Derivation from TGP/Energy Security to Mollendo Branch (Km762) 24” from Km 762 to the end of the pipeline at Ilo 9 Scrapper Facilities 27 section valves (blocking and bleeding stations) 8 branches: Quilibamba, Anta, Apurimac, Espinar, Juliaca /Puno, Arequipa, Mollendo, Moquegua, Tacna 23
  24. 24. Technical Considerations: Gasoducto Sur Peruano CAPEX Estimate Gasoducto Sur Peruano CAPEX Estimate Estimated Total CAPEX : $2,463,000,000 Cost Breakout Basic Engineering / Feed Surveys Cost ($) Excluded 20,000,000 Detailed Engineering and Project Management 112,000,000 Materials - Line Pipe, Major Valves, etc. 882,000,000 Compression and Equipment Not required Controls : Field Instruments, Sub-Systems, Bulks, SCADA and RTU 62,000,000 Buildings 16,000,000 Construction Works 1,371,000,000 24
  25. 25. 1. Project background 2. Project description 3. Technical considerations 4. Contract considerations 5. Q&A
  26. 26. Key Contractual Considerations Issue Discussion • • • Phase 2 will run from the Derivation Point to Chiquintirca. • Pipelines Dimensions: 36-inch for natural gas; 24-inch natural gas liquids Qualified Bidders have reasonable discretion regarding the pipeline route. • This 30-year Concession will be single Concession in two Segments. • Concession 2: Gasoducto Sur Peruano (GSP) Phase 1 will run from the existing natural gas fields in the Malvinas to the Derivation Point at or around KM 73 on the existing TGP pipeline system. • Pipelines Dimensions: 36-inch for natural gas; 24-inch natural gas liquids • Concession 1: Energy Security This 30-year Concession will be a single Concession in two Phases. Segment a1 will run from the Derivation Point to roughly Urcos • Pipelines Dimensions: 32-inch for natural gas • Segment a2 will run from Urcos south to Mollendo and Ilo • Pipelines Dimensions: 24-inch for natural gas • Qualified Bidders have reasonable discretion regarding the pipeline route. Questions? 26
  27. 27. Key Contractual Considerations Issue Discussion Questions? • • Bidder Selection Minimum technical and financial criteria will be applied to pre-qualify Bidders The winning bid will be selected based on the Total Cost of Service • MINEM and ProInversión propose some processes to help Winning Bidder manage risks: • Cost of Service Adjustment Process • Right of Way Risk • Local Community Support Risk 27
  28. 28. Key Contractual Considerations Issue Discussion MINEM and ProInversión recognize it may be challenging for prospective Bidders to estimate the cost of construction of the pipeline owing to the difficult terrain, geotechnical and weather conditions. MINEM and ProInversión propose a process – the Cost of Service Adjustment Process -- by which unexpected events and related cost adjustments might be incorporated into the cost recovery system of the pipeline system. Questions? Cost of Service Adjustment Process If, during the course of the construction of the pipeline actual construction costs are determined to be higher than those used to derive the Total Cost of Service, Winning Bidder may petition to adjust the Total Cost of Service. This process would be used, amongst other things, to address such issues as potential cost increases and schedule delays owing to unexpected archaeological finds and the possible related need to reroute the pipeline. A qualified and independent international engineering firm would review the Adjustment Petition as quickly as is practical and, in conjunction with MINEM/ ProInversión, approve re-routing and related modifications in construction costs (and overall Total Cost of Service) as well as potential modifications to the construction schedule Adjustments to the Total Cost of Service would be limited to 15% 28
  29. 29. Key Contractual Considerations Issue Discussion Questions? MINEM/ProInversión recognizes that it is challenging for a Bidder to develop an accurate estimate of the cost of acquiring Right of Way for the construction of the pipeline without spending many months discussing ROW issues with the many affected stakeholders in Peru. It is intent of MINEM/ProInversión to limit ROW cost risk and make it easier to Bidders to estimate the overall cost of the pipeline project. MINEM/ProInversión will do so in the following steps: • Right of Way Cost Risk • • • • MINEM/ProInversión will for each pipeline Concession, provide estimated ROW costs Bidder will bid to this estimated cost, such funds to ultimately be placed in escrow from the Winning Bidder If total ROW costs exceed the estimated ROW costs, such additional costs will be paid by Bidder but will be added to the winning bid and will be recovered as part of the overall cost recovery mechanism If total ROW costs are less than estimated ROW costs, such difference will be distributed to local communities along the route of the pipeline It will still be the role of the Winning Bidder to negotiate ROW with appropriate stakeholders in consultation with and with the support of MINEM/ProInversión 29
  30. 30. Key Contractual Considerations Issue Discussion Questions? MINEM/ProInversión recognizes that the local Peruvian communities affected by the construction of the pipeline could, in some cases, raise important issues and concerns that could delay the construction of the pipeline. The government will provide a best efforts attempt to facilitate the delivery of the environmental and construction permits and to gain social acceptance of the project in the affected communities Local Community Support Possible delays in the construction of the pipeline system caused by lack of local community support that lead higher costs will be managed through the Cost of Service Adjustment Process Possible delays in the construction of the pipeline system caused by lack of local community support that make is impossible for the Winning Bidder to commission the pipeline according to schedule will be considered a force majeure event 30
  31. 31. Project Background: Recovery of Cost of Service: Summary Most costs recovered from a “surcharge” on users A combination of recovery mechanisms depending on the pipeline segment The revenue for the pipelines included in the Security Node will be entirely recovered by the users of the TGP and GSP As contracted volumes on the pipelines increase, the surcharge declines Over time, conversion of the diesel-fired Energy Node to natural gas as well as industrial development creates long-term contract revenues, reducing the need for the surcharge Mechanism of Guaranteed Income “Mechanism of Guaranteed Income” – Law 29970: Peruvian government through this mechanism guarantees the investment recovery in all trenches of the pipelines (natural gas and liquids) Winning Bidder effectively holds Peru economy risk Ability to collect the surcharges and the tariffs from users 31
  32. 32. Contract consideration: Remuneration system There are three different systems that will work in these various concessions to guarantee the payment to the winners of the projects Energy Security and Gasoducto Sur Peruano Systems Concession 2: GSP Concession 1: Energy Security Product Pipeline b and c Payment – all liquids users in the country The tariff for the liquids security loop is distributed between all the liquids users and is sufficient to cover the cost of service of the liquids product pipeline. Gas Pipeline b and c Gas Pipeline a1 Payment - all natural gas users in the country Pipeline Tariffs from users The tariff for the gas pipelines included in the energy security is distributed between all the users of natural gas and is sufficient to cover the difference between the cost of service of the gas pipelines and the payment of the users of the gas at Quillabamba. Gas Pipeline a2 GRP Pipeline Tariffs from users The GRP would compensate for the difference between the cost of service of a2 and the revenue generated from the users of a2 (generators and others). 32
  33. 33. Contract consideration: Estimated Cost of Service The Cost of Service accounts for Capex/Opex and the tax regime Cost of service of the security pipelines (MM$) Cost of service of the GSP (MM$) 1,166 3,005 760 406 Security liquid loops 2,117 888 Security natural Security loops gas loops GSP Segment a1 GSP Segment a2 GSP Total 33
  34. 34. Contract consideration: Remuneration system INDICATIVE Tariff System Pipeline Applicable Tariff Affected Consumers Tariffs Impact on enduser price Product Pipeline b y c Security tariff All liquids users in the country $1.1/bbl 2% Security tariff All natural gas users in the country $0.5/kcf 9% $1.2/kcf N/A $2.1/kcf N/A $1.2/kcf N/A $2.1/kcf N/A $0.13¢/kWh 2% Gas Pipeline b y c Regulated Tariff GRP Tariff Gas Pipeline a1 Generator users of GSP – segment a1 All other users of GSP – segment a1 Generator users of GSP – segment a2 All other users of GSP – segment a2 All electricity users TGP Tariff Regulated Tariff(GSP) TGP Tariff Gas Pipeline a2 It is assumed that all tariffs are adjusted based on IPP: “Finished Goods Less Food and Energy” 34
  35. 35. Project Description: Timeline for the pipelines bidding process Activity Oct 2013 Nov Dec Jan 2014 Feb Mar Apr Roadshow Calgary Roadshow Houston Roadshow Lima Consultation of the tender documents Responses to the consultation Qualification of participants Communication to all the qualified participants Publication of the final version of the contracts Presentation of the legal, technical and commercial proposal Award of the contract Contract closure 35
  36. 36. Project Description: Timeline for the power plants bidding process Activity Update to tender documents published Consultation of the tender documents Responses to the consultation Pre-qualification of Participants and timeline for establishment of consortiums Communication to all the qualified participants Publication of the final version of the contracts Presentation of the legal, technical and commercial proposal Award of the contract Contract closure Aug Sep Oct Nov 05. 12. 19. 26. 02. 09. 16. 23. 30. 07. 14. 21. 28. 04. 11. 18. 16/08/2013 17/09/2013 25/09/2013 15/10/2013 28/10/2013 30/10/2013 13/11/2013 15/11/2013 TBD 36
  37. 37. 1. Project background 2. Project description 3. Technical considerations 4. Contract considerations 5. Q&A
  38. 38. Questions? Questions? 38
  39. 39. www.proinversion.gob.pe contact@proinversion.gob.pe

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