Gas connections in south west concession will triple

The massification of natural gas in the south-west concession managed by Petroperú—after the untimely departure of the Spanish company Naturgy in 2020—could be postponed due to the delay in the bidding of the S/200 million budget granted by the central government for this purpose.

Petroperú is not a concessionaire, but rather a temporary administrator since 2020 through DS 029-2020-EM. With this mechanism, the Ministry of Energy and Mines (Minem) entrusted the company with the temporary administration of the public natural gas distribution service in the regions of Arequipa, Moquegua and Tacna for a period of 3 years, which expires on December 18 of this year.

Petroperú’s functions are to operate and maintain existing assets (6 regasification plants and 400 kilometers of networks in Arequipa, Moquegua, Ilo and Tacna), according to applicable regulatory obligations. At this moment there are 11,519 active home connections in the concession, in addition to 27 businesses and 18 industries.

The construction of networks or the connection of new users is not contemplated as part of the assignment. Recently, DS 019-2023 EM was published, which renews the order for up to 3 years (December 2026) with the same functions.

More homes waiting

In May 2023, Petroperú and Minem signed a specific agreement in which it is agreed that the latter will build new networks and make new natural gas connections (through companies contracted specialists), while the oil company will be in charge of supervising the works and contributing to their compliance. This would be an additional and specific function linked to the agreement.

Although the agreement began to be evaluated in 2021, it was only signed in 2023, due to multiple changes in senior positions at Petroperú and Minem.

However, the S/200 million from the Energy Social Inclusion Fund (FISE) destined for this task after the signing of the agreement have not yet been put out to tender by the General Directorate of Hydrocarbons (DGH), which inherited from Osinergmin the administration of this fund originally created for the promotion of LPG, another type of gas.

Newly From this tender the execution stage begins, in which Petroperú will have the role of supervising network development. Sector sources indicated that the item should be tendered to the highest bidder between the last quarter of 2023 and the first months of 2024.

The Government’s proposal includes breaking, in the short and medium term, the barrier of 36,000 natural gas connections in the south-western concession – out of the almost 12,000 existing -, with special emphasis on the Arequipa region, according to official information to which La República had access to.

No conflict of interest

Although it is true that the state oil company markets a fuel other than natural gas, overcrowding would not affect its ongoing business, according to the source consulted. Even though Petroperú is a producer of LPG (kitchen ball), its production does not reach 5% of the national supply, which is taken over by Pluspetrol.

“Where there could be some competition is at the NGV level, but it is not true that it would stop making money and that is why the work is delayed. Competition is minimal in that market, there is no conflict of interest,” he said.

It should be noted that another of the cornerstone aspects for massification in the south of the country, in addition to the establishment of ‘anchor’ links that make the business profitable, it is urgent to accelerate the conversion of heavy vehicles and increase the networks of LNG taps, another derived from natural gas.

Massification in the south with 300 new km of networks

Petroperú will supervise, under the new agreement signed with Minem, the construction of 300 kilometers of networks that will serve to increase the new residential connections in Arequipa, Tacna, Moquegua and Ilo by more than 20,000.

The works financed and executed by Minem will be channeled through the Bonogas and Con Punch Perú programs of FISE.

After the South Peruvian Gasduct was paralyzed in 2017 as a result of the Odebrecht corruption scandal, Naturgy resolved the concession contract that had begun to operate that same year, and where invested more than US$100 million until its exit. Without this promised infrastructure, the business was no longer profitable.

Data

• Gas. Overcrowding is slow in the south because it arrives by tanker truck. There must be a gas pipeline. Therefore, slow penetration does not imply great competition.
• Lying. Recently, the Executive Branch has decided to resume the South Gasduct project and declared its viability under the SIT-Gas scheme.