Peru’s Energy Sector is Expanding

Peru has the potential to be a key international producer of oil & natural gas. After decades of neglect, the Peruvian government has stepped up its effort to attract exploration capital from the world’s oil companies.

Peru’s state-run oil company Petroperu operates several refineries and oversees all of the country’s oil & gas contracts. According to the EIA, 80 percent of Peru’s oil output comes from just four companies.

Peru has 553 million barrels of proven crude oil reserves split between offshore and the Amazon region. The government claims the country’s reserves could total 6 billion barrels once they are fully explored.

Peru produced nearly 158,328 barrels per day of oil in 2010, up more than 50 percent from the previous year.

The majority of the oil produced in Peru is considered heavy and must be exported to other countries to be refined into finished products.

Because Peru can’t refine the majority of the oil it produces, the country relies on imports to meet its oil needs. The country imported nearly 100,000 barrels a day of oil in 2009. About half of those came from Ecuador.

Oil accounted for roughly half of Peru’s total energy demand in 2008 but the majority of the country’s electricity comes from hydroelectric power. The Economist Intelligence Unit forecasts hydroelectric power could account for 70 percent of the country’s electricity needs by 2020.

Peru’s natural gas reserves are the fifth-largest in South America behind Venezuela, Brazil, Argentina and Trinidad & Tobago. It’s estimated the country has nearly 13 trillion cubic feet of reserves.

Peru’s natural gas production jumped a staggering 108 percent in 2010. The majority of this was generated by production increases from the Camisea reserve, an offshore field in northwest Peru.