New Projects Portfolio Hydrocarbons · talara basin hc province • first well in 1863 • production • cum. 1,500 mmbo 2 tcf • present production: onshore 22,400 bpd offshore

• By Ronald Egúsquiza

• Promotion Manager, Perupetro

18th Meeting, Iquitos- Peru, 04 March 2008

Business Network Forum

New Projects Portfolio

Hydrocarbons

Perupetro S.A.

With more than

2,000 km shore in front

the Pacif Ocean

It is becoming a "regional

hub" in the South

American Pacific Area.

Peru

Peru

84 E&P Contracts

19 Exploitation

65 Exploration

06 TEA

Coalbed

Methane

Diesel from

Bitumen

Peru

84 E&P Contracts

19 Exploitation

65 Exploration

Heavy Oil

Modernization

Talara Ref.

LNG Project

Petrochemical

Industry

Contract Stability

Competitive Royalties

Flexible work programs

Huge Natural Gas Potential

Heavy and Light Oil discoveries

Perupetro S.A.:

In process

to launch 2008

Bidding Round in Peru

Open acreage for E&P

License Contract

New Projects Portapolio: E&P License Contracts

According to law, its social objectives include amongst others :

Promote investment in hydrocarbons exploration and production activities.

Negotiate and subscribe oil contracts on behalf of the Peruvian State.

Exercise the supervision of such oil contracts.

Management of State Oil Revenues and transferral of these to Central Government.

PERUPETRO S. A. is a State Company created in 1993

by Law N° 26221 - Hydrocarbons Organic Law.

Started activities on 18.11.93.

PERUPETRO S.A. DEC, 2007

ADVANTAGES OF PERU’S CURRENT

HYDROCARBONS LAW (1993)

Freedom to bring in and repatriate funds

to and from Peru. No permits required.

Absolute freedom to sell all hydrocarbons produced.

Exports are tax exempt.

Absolute freedom to fix sales prices according to

supply and demand.

Possibility of International Arbitration.

LICENSE CONTRACTS IN PERU

Royalty Contract .

License instead of concession.

100% risk taken by Oil Companies.

Oil Companies own 100% property of hydrocarbons

extracted by them.

Terms: 30 years for oil, 40 years for Natural Gas.

Exploration 7 years, possible 3 years extension, to

complete up to 10 years.

Local labor: free market.

No quotas for local market.

Direct Negotiations and Public Biddings


Stability: Macroeconomics

0

2

4

6

8

80 82 84 86 88 90 92 94 96 98 00 02 04 06

6,4

5,2

3,9

5,2

Peru

7,6

8,9

07*

Developed

World

GD

P G

row

th(A

nnual va

riation %

)

Sustained economic growth with average annual

forecast greater than 7% for 2006 – 2010*

(*)Forecasted by Central Reserve Bank of Peru and the Ministry of Economy and Finance.Source: International Monetary Fund and the Central Reserve Bank of Peru.

Source: Bloomberg

Sustained lower country risk compared with Latinamerica average risk index

Updated October, 20th 2007

100

200

300

400

500

600

Oct-

07

Aug-0

7

May-0

7

Mar-

07

Jan-0

7

Oct-

06

Aug-0

6

Jun-0

6

Apr-

06

Feb-0

6

Dec-0

5

Oct-

05

Aug-0

5

May-0

5

Mar-

05

Jan-0

5

Nov-0

4

Sep-0

4

Jul-04

EMBI + Peru Latinamerica

Dec 31, 2003:

27 (12 Ex, 15 Prod.)

2000

2001

2002

2003

1

4

2

2

2004

2005

2006

2007

Peru’s Signed Contracts

PERUPETRO S.A.

Actions already taken to improve exploration in Peru

Three lines of action:

• Improved technical information

accessibility.

• Enhanced economic incentives for

contracting. Let the market fix new

level of royalties for the State.

• Improved contract model allowing

shorter period of negotiations.


Actions that we have taken:

• All technical information free of cost.

• New basin studies.

• Information available through internet

http://www.perupetro.com.pe

• Quality Control for technical data.

• Available information of open acreage.

Improved technical information accessibility

An innovative method for new royalties: “MINIMUM OF 5%” :

• Transparent – No negotiation.

• Easy to apply.

• TWO OPTIONS TO BE CHOSEN FROM BY THE E&P Co.:

a) Production Level

b) Economic Results

• The E&P Co. will choose its best option at the optimal

moment:

“At the point of announcing a commercial discovery”.

•Additional royalties to be added as part of bidding rounds.

Improved Economic Contract Conditions

PERUPETRO S.A. DEC - 2007

Actions that have been taken:

• New Royalties Method reduces negotiation period.

• Flexible Work Minimum Program based on

UTE’s (Unidades Técnicas de Exploración).

The Oil Company decides its best work program based on the available information.

• Flexible term of periods during the exploration phase,

depending on the amount and availability of

technical information in our Data Bank.

Improved Contract Model

PERUPETRO S.A. DEC- 2007

STABILITY OF CONTRACTS IS BASED ON:

Contract approved by Presidential Decree – same level as a Congress Law - “Contract–Law”.

Contract signed by Peru-Petro S.A. as a “Sociedad Anonima” follows corporate rules

So this Contract is signed “Enterprise to enterprise”.

International Arbitration is part of the Contract – there is a specific Clause for this.

Present Government – Took Political Decision not to modifiy the current Hydrocarbons Contract Model.

2000

2001

2002

2003

1

4

2

2

2004

2005

2006

6

15

16

24

Peru’s Signed Contracts

2007

?2008


August, 2007, 64 (45 Ex, 19 Prod)Dec 31, 2004 31 (14 Ex, 17 Prod.)


August, 2007, 64 (45 Ex, 19 Prod)

From 19 Blocks offered,

14 Blocks were signed

2007 Bidding

Round in

Peru

PERUPETRO S.A. SEPT, 2007

Dec, 2007, 84 (65 Ex, 19 Prod)

Peru offers:

Open areas

Competitive Contract

Royalty scheme

Information Free of cost

Bidding Round

Recent discoveries of

Natural Gas and Heavy

and Light Oil

HC PRODUCTION PERU

LIQUIDS

NEAR 120,000 BOPD

OIL

CONDENSATES

HC PRODUCTION PERU

GAS

255 MMCFD

North Peruavian Pipeline

• CAPACITY 200 MBPD

854 KM LONG

Maranon Production

Cum. Near 1,000 MMBO

• PRESENT PRODUCTION:

40,000 BPD

24”

306Km

16 MBPD36”

548 Km

16”

252 Km

24 MBPD

Camisea Pipelines

• CAPACITY

500 MMCFD

60 MBPD Cond


250 MMCFD

36 MBPD Cond

Production & Infrastructure

COASTAL PRODUCTION

TALARA BASIN HC PROVINCE

• FIRST WELL IN 1863

• PRODUCTION

• Cum. 1,500 MMBO

2 TCF


ONSHORE 22,400 BPD

OFFSHORE 12,100

• REFINERY CAPACITY

60,000 BPD

TUMBES BASIN

• BPZ ADD. FEW THOUSANDS

BOPD SINCE LATE, 2007

Cuenca

Maranón

Cuenca Lima

Cuenca Pisco

Cuenca

Titicaca

Cuenca

Huallaga

Cuenca

Ucayali

Yellow Areas represent

OPEN ACREAGE in

Sedimentary Basins

• Open for License Contracts

• Perupetro is studying this

areas for a next process

Presentations

• MARANON BASIN

• HUALLAGA BASIN

• UCAYALI

• LIMA & PISCO BASINS

• TITICACA BASIN

PROPOSAL EVALUATION

BIDDING ROUND

FINAL SCORE = TECHNICAL PROPOSAL SCORE + ECONOMIC PROPOSAL SCORE + GROSS REVENUES INDEX

PROPOSAL EVALUATION

FINAL SCORE = TECHNICAL PROPOSAL SCORE + ECONOMIC PROPOSAL SCORE + GROSS REVENUES INDEX

PROPOSAL

(Two sealed envelopes)

TECHNICAL PROPOSAL

ECONOMIC PROPOSAL

ENVELOPE N° 1

ENVELOPE N° 2

Application Letter

Documents for

qualifications required by

law

PASSFAIL

PASSFAIL

Two sealed envelopes:

Technical proposal

(envelope N° 1) and

Economic Proposal

(envelope N° 2).

ROUND OF BIDDING SCHEDULE

START ROUND OF BIDDING

Date for application will be announced

soon.

Information about OPEN ACREAGE can be requested as from now.

Later: Once Bidding started, Package of Specific Blocks will be produced and

delivered to applicants as a part of the Bidding Process.

After that: A period for questions and clarifications will be considered as part of this

process.

THANK YOU ALL VERY MUCH

Ronald Egúsquiza

[email protected]

PERUPETRO S.A.

Luis Aldana 320 – San Borja

Tlf. 6171800 – Fax. 6171801