The mining engineer Romulo Mucho He was appointed this week as Oscar Vera Gargurevich’s replacement in the Ministry of Energy and Mines (Minem), at a time when the sector is torn between unblocking large mining projects and supporting Petroperú operations.
This is one of the portfolios with the most pending issues in the Executive. Mucho’s entry has occurred alongside that of other ministers in critical positions, such as José Arista in the Ministry of Economy and Finance (MEF).
Rómulo Mucho: Minem, shareholder of Petroperú
Among the first challenges that Rómulo Mucho will have to face at the head of Minem is the awarding Lot of Talara, which is sought by both the state-owned Petroperú and its previous operators, the Chinese state-owned CNPC, although President Dina Boluarte has opted for the first option.
Precisely, Petroperú will be one of the cornerstone issues for this Minem, which had not been renewed since the new Government took office. The Peruvian company faces a process of reorganization and corporate strengthening in order to clean up its accounts and become a mixed firm.
The national oil company did not have a good start to the year after the Peruvian Government denied it new financial support in cash, a situation that also led to a drop in the prospects of its bondholders, that is, a lower rating that complicates its ability to indebtedness.
Much has been critical of the oil company before. It comes at a time when the company’s General Meeting of Shareholders (AGM) has been reconstituted and will have equal weight between Minem members and their MEF peers. However, Otárola has already announced that they will not let Petroperú go bankrupt.
Rómulo Mucho and the unlocking of Tía María
Where Mucho performs like a fish in water is in the mining sector. He is a recognized specialist in the subject and a frequent speaker, thanks to the fact that he has also developed programs that seek to link extractive activity with local agriculture.
How does the sector receive its new minister? With zero new large-caliber investments for the coming years. The last major mining investment was Quellaveco, but it is already up and running and producing. At this point, Mucho has stated on more than one occasion that it is necessary to unblock Aunt Mariain Arequipa.
The miners have accused a lack of predictability, associated with great social and political conflict between the Executive and Congress, as well as too many delays in environmentally unblocking their projects.
This year, Peru will become the world’s third largest supplier of copper, behind the Congo. The drop in prices in 2023 also complicates the outlook for the development of new mines, but there is a pending portfolio of more than US$53 billion for which Much advocates.
Minem and the promise to massify Camisea gas
There is also the issue of the massification of natural gas. In 2024, it will be 20 years since it was promised that all Peruvians would have access to cheap, accessible and clean fuel of national origin.
But Camisea has another 20 years of reserves left and, outside of Lima, it has only become relatively overcrowded in the north and part of Ica, the latter region only because there is the route of the tubes that are used to sell gas by ship, in the port of Peru LNG (Pisco).
Before leaving, Vera made it clear that they will seek to massify natural gas from Camisea, operated by Pluspetrol, with the construction of an Energy Ring in the south of the country, which includes the SIT-Gas and the coastal gas pipeline.
This would not only facilitate the operation of a petrochemical plant that ‘pulls’ gas to the south, but would also relieve the FISE cash flow that is currently used to develop home networks. But there is a critical issue that Mucho will have to resolve: a flat gas rate for the entire country.
Generating electricity in Peru is increasingly expensive
Finally, in the electricity sector the main risk is the climate crisis facing the national territory and which threatens to increase generation costs. Only last year peaks of US$200 per MWh were reached, five times its value in previous years.
While it is true that domestic rates are not affected by generation costs (water, solar, wind, diesel) in the short term, a market that tends to rise year after year would complicate the scenario for new tenders that ensure, precisely, the rates for homes.
Minem is also promoting a project that would favor the entry of new wind and solar energy into the national generation market, but it is stalled in Congress. As long as the market is not opened, more and more diesel will continue to be burned to meet local demand.
With the development of more infrastructure, in addition to the arrival of natural gas to the southern cold reserve (with the same pipelines detailed in the previous section), the volatility of the marginal costs for electricity generation in Peru. To take note.
Source: Larepublica
Alia is a professional author and journalist, working at 247 news agency. She writes on various topics from economy news to general interest pieces, providing readers with relevant and informative content. With years of experience, she brings a unique perspective and in-depth analysis to her work.
