China May Expand Oil Exploration, Refining Investments in Peru

China may increase exploration and refining investments in Peru, South America's fifth-largest gas producer, to boost fuel output as domestic demand rises.

Peruvian government officials will meet with executives at China National Petroleum Corp., the nation's biggest oil company, later this week, Vice Energy Minister Pedro Gamio Aita said in an interview in China's southern city of Guangzhou yesterday. Peru will seek technical support from China on oil exploration, Gamio said, without elaborating.

The South American country is counting on $4 billion in investment in its oil and gas industry to spur an annual 7 percent economic growth over the next four years. China, the world's second-biggest energy user, is encouraging domestic producers to expand fuel output to meet surging demand, prompted by the fastest economic growth in a decade.

"We want to improve and consolidate current strong ties," Gamio said.

China National Petroleum, based in Beijing, operates five oilfields in Peru, accounting for about 33 percent of the South American nation's total oil output, the minister said.

The Chinese company, the parent of Hong Kong-listed PetroChina Co., wholly owns Block VI and VII, which produce about 3,000 barrels of oil a day, he said. It has a 50 percent stake in Block 1AB in the northern Amazon jungle with a daily output of about 40,000 barrels and is exploring Block 113 and Block 111 in the Madre de Dios Basin for oil and gas deposits, said Gamio.

Projects

China and Peru signed an initial agreement on heavy oil exploration and refining earlier this year, he said, without giving details.

The Latin American nation has signed a record 33 exploration contracts in two years in a bid to boost oil production, which fell 5 percent to 72,121 barrels a day in March from a year ago, according to state oil-licensing agency Perupetro.

Peru's natural gas output in June climbed 27 percent to a record 277.7 million cubic feet from the previous month after Argentina's Pluspetrol SA boosted output at the Camisea gas fields, Perupetro said July 4.

China increased crude imports from the Latin American country 88 percent to 172,085 metric tons in June, the Beijing customs said July 23. Peru was China's 15th largest crude supplier that month.