Qosqo Peru

The President of the Republic, Alan Garcia, said today that it would be unfair that the royalties paid for natural gas exports are less than those paid for the consumption of oil in the domestic market.

"In the case of gas, now starting to export, we have proposed a renegotiation to help ensure that in any case the export of such proceeds to pay lower royalties than domestic consumption."

This would mean that the domestic market subsidizes foreign consumers which is unfair, stated in his Address to the Nation on Independence Day in Congress.

Note that Perupetro recently reported that formally initiated the Camisea consortium led by Pluspetrol, negotiations to establish the royalties to be applied to export natural gas from Camisea on 5 August.

In early July, the Ministry of Energy and Mines (MEM) issued a supreme decree provides that in no case the royalty rate, expressed in dollars per million British Thermal Unit (BTU) of natural gas for export, may be less than the average value of the royalty of natural gas for the domestic market.

The rule states that Perupetro initiate all actions necessary or appropriate renegotiation with contractors to agree amendments to its license agreements, so that when the final destination of the natural gas export is strictly apply that criterion.

"I must say that this policy of renegotiation and apply it in December 2006 to rectify a serious error of the original contract, signed earlier by the domestic price of gas had reached up to five dollars," said Garcia.

With that price, electricity generation in gas turbines or industrial use of transport had been two or three times higher than currently paid, he said.