November 4, 2014 / 2:18 AM / in 3 years

UPDATE 2-Peru likely to start Petroperu sale in Q2 2015

(Adds details, context, quotes)

By Mitra Taj

LIMA, Nov 3 (Reuters) - Peru will likely begin selling up to 49 percent of state-run energy company Petroperu on the Lima stock exchange in the second quarter of 2015, Deputy Energy Minister Edwin Quintanilla said in an interview on Monday.

The government is now studying what size of a stake it should sell on the bourse, Quintanilla said. Peru passed a law late last year allowing for the privatization of all but a controlling stake in Petroperu in a bid to modernize the 40-year-old company.

Peru had previously said the sale would start in the middle or the end of 2015.

Petroperu announced last month that it would produce oil for the first time in decades via its 25 percent stake in an oil block controlled by GeoPark Ltd.

Oil output in the Andean country is on track to rise this year for the first time after a decade of declines that bottomed out at 63,000 barrels per day in 2013, Quintanilla said.

Crude output will likely increase by about 5 percent to average between 65,000 to 70,000 bpd in all of 2014, thanks to rising production from the country’s jungle blocks.

Late last year, oil production started ramping up at block 67, controlled by privately-held Perenco, as well as at block 95, operated by Gran Tierra Energy.

“Our goal is to reach more than 100,000 barrels per day in the coming years, in five to 10 years,” Quintanilla said.

Natural gas production in the Andean country is also set to increase with the expansion of the country’s main pipeline, which links Peru’s abundant Camisea gas fields in its southern jungle to the Pacific coast.

Camisea holds some 15 trillion cubic feet in proven natural gas reserves.

In 2016, Peru’s natural gas output will reach 1.55 billion cubic feet per day, up 29 percent from the current 1.2 billion, Quintanilla said.

The expansion project has been held up in part because of threats by a remnant band of Shining Path rebels in the jungle.

But the construction of key compressors will likely wrap up in the first quarter of 2016, adding 300 million cubic feet to daily capacity, Quintanilla said.

Apart from Camisea, exploratory block 76 likely holds the biggest reserves of natural gas in Peru, said Quintanilla.

“It has huge potential,” Quintanilla said, declining to offer a specific estimate.

Quintanilla also said Peru is considering linking a new natural gas pipeline in southern Peru to its landlocked neighbor, Bolivia.

Peruvian officials will meet with their Bolivian counterparts this week to continue preliminary talks on the possibility, Quintanilla said.

Connecting Bolivia to the pipeline would offer the major gas producer a Pacific outlet for its exports and would help Peru meet domestic demand at lower prices.

The pipeline, being built now by Brazilian construction firm Odebrecht, is expected to be ready in 2017.

Reporting by Mitra Taj; Editing by Alan Crosby

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