Eric Watkins
Senior Correspondent

LOS ANGELES, July 24 -- Peru's state-owned Petroleos del Peru plans to invest some $50 million for an extension to the 852-km Norperuano crude oil pipeline that runs to the Pacific coast from fields in the northeastern jungle region.

Work on the pipeline extension, scheduled for June-December 2009, will include the installation of pipeline loops allowing the transport of heavy oil to the port of Bayovar from Block 67, now operated by Perenco Peru, Ltd.

The pipeline currently transports crude to Bayovar from the areas of San Jose de Saramuro and Andoas in Loreto.

Petroperu also is said to be negotiating to buy Perenco Peru's heavy crude oil for use in its Talara refinery, now scheduled for a revamp. Perenco Peru reportedly expects to produce 30,000 b/d in the block by the end of 2010. It will be transported via the pipeline.

Earlier this year, Perenco, Paris, completed the acquisition of Barrett Resources (Peru) LLC, which owned three heavy oil fields set for development on Block 67 of the Maranon basin (OGJ, Jan. 21, 2008, Newsletter).

A development plan approved in July 2007 called for oil production to start in January 2011, and—according to Perenco—the three fields on Block 67 will be able to produce up to 100,000 b/d from more than 300 million bbl of proved and probable reserves.

Refinery upgrade
The announcement about the Norperuano pipeline development coincided with reports that Petroperu will accept offers from prequalifiers on Aug. 1 for the management consultancy services tender for the $1 billion revamp of the Talara refinery.

The prequalifiers are ABSG Consulting, Consorcio Inelectra-Idom Ingeneria y Consultoria-Nippon Koei, Germanischer Lloyd-Lloyd Germanico de Mexico, and Venezolana de Proyectos Integrados-Vepica.

The Talara revamp aims to increase refinery capacity to 90,000 b/d from 62,000 b/d, optimize fuel quality at existing units, and construct new ones.

Bidding also is underway for the project's front-end engineering and design and engineering, procurement, and construction contract, with offers due on Aug. 22. Eleven groups have prequalified for the contract, including Dragados Industrial, Intecsa Ingenieria Industrial, Technip, Tipiel, SK Engineering & Construction, Snamprogetti, Constructora Norberto Odebrecht, GS Engineering & Construction Corp, Fluor, Foster Wheeler, and Tecnicas Reunidas.

The pipeline and refinery developments coincide with reports that Peru, already South America's fifth-largest gas producer, will become a net oil exporter by 2010.

According to energy minister Juan Valdiva, new fields under development by Repsol-YPF SA and Perenco could add 800 million bbl in crude reserves at their northern jungle oil fields.

The energy ministry said Peru is counting on $6 billion in investment in its oil and gas industry, including the $1 billion upgrade of the Talara oil refinery, to spur economic growth of 7%/year over the next 4 years.

Contact Eric Watkins at hippalus@yahoo.com.