With vast reserves, Lima seeks to boost Peruvians’ use of natural gas

Lima, Sep 23 (EFE).- The benefits Peru gets from exporting some of its massive reserves of natural gas pale in comparison to the gains to be had from transforming the nation’s economy to run on that fuel instead of continuing to rely on less environmentally friendly options such as gasoline and diesel.

The main obstacle to such a transformation is the location of the rich Camisea gas field in a remote corner of the southern region of Cuzco, from where the fuel is transported to the Pacific coast via two pipelines that traverse the Andes mountains.

One conduit leads to the main export terminal in Pisco, while the other carries gas northward up the coast to the Lima metropolitan area.

The idea of one or more additional pipelines to link Camisea to the major cities in southern Peru, Arequipa and Cuzco, remains no more than a concept at this point.

Gonzalo Tamayo, a former energy minister now working as a consultant, told Efe that the cost of building a nationwide distribution network are so high that a private company would be forced to charge prohibitive prices to recoup the investment of creating such a system.

“The price signal sent to consumers must be sufficiently attractive for them to change from one fuel to another that is more efficient, more economical and friendlier to the environment,” he said.

Major investment will also be needed to convert cars, trucks and buses to run on vehicular natural gas (VNG) and to ensure widespread availability of VNG, which is much cheaper than gasoline or diesel.

“This imbalance between cost and efficiency requires some kind of state subsidy,” Tamayo said.

That opinion is shared by Gonzalo Castro de la Mata, head of external affairs for Pluspetrol Peru, the company that operates the Camisea field.

“Peru is a country that has been blessed by gas,” he told Efe. “There is enough gas to export, to supply internal consumption and on top of that, we now re-inject 25 percent of what is produced.”

“It’s much cheaper than diesel, much less polluting than other fuels and we have it in abundance. Making us of its gas is completely logical for Peru,” the executive said.

Pluspetrol and its partners in the Camisea Consortium have set up three VNG service stations in Cuzco and established a $39 million fund to finance purchases of trucks and buses built to run on natural gas.

While a VNG vehicle costs more than one with a diesel engine, the difference in the price of the two fuels is enough to cover the higher initial outlay, Castro de la Mata said.

As part of an accord with the Energy Ministry, the consortium is also offering 50 million cubic ft per day of natural gas (roughly equivalent in energy to 300,000 gallons of diesel) to consumers at discounted prices.

“Infrastructure to transport the gas to homes is lacking and incentives to promote its use are lacking,” he said. “The private sector and the state have to work together to promote all of these options that exist.” EFE

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