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Hunt announces progress on LNG project in Peru

Posted: 1 October 2003

Hunt Oil Company of Dallas, Texas, announced today that a Letter Agreement has been signed to purchase excess natural gas from the Camisea fields in Peru to be used in a proposed LNG export project to be built on the Pacific coast of Peru.

Additionally, Hunt Oil announced that a Memorandum of Understanding has been signed for the sale of 2.7 million metric tons of LNG per year from that proposed plant to Tractebel LNG, which intends to utilize the LNG to meet its market needs in Mexico.

Ray L. Hunt, Chairman of Hunt Oil Company, said, “We are very pleased to announce these purchase and sales agreements today, which signifies that significant progress has now been made in the ‘pre-launch’ phase of the Peru LNG project.”

The announcements occurred at the Presidential Palace in Lima with President Alejandro Toledo attending, along with members of his cabinet. Heads of companies attending, in addition to Mr. Hunt, were Mr. Dirk Beeuwsaert, Chief Executive Officer of Tractebel Electricity & Gas International, and Mr. Luis Rey, President of Pluspetrol.

The company said that negotiations with the upstream consortium of the Camisea Project, led by Pluspetrol, have resulted in a Letter Agreement to sell excess gas from the Camisea fields to the proposed LNG liquefaction plant, which will be built by the PERU LNG Company. Hunt Oil Company will be the operator of the Peru LNG project.

A more definitive gas supply agreement is expected to be completed by the end of 2003.

At the same time, the company said that a Memorandum of Understanding has been signed between Tractebel LNG of Belgium and PERU LNG Company for Tractebel LNG to purchase 2.7 million metric tons of LNG each year.

A definitive LNG sales agreement finalizing this arrangement is also targeted for the end of 2003. The operating company for the LNG project, PERU LNG Company, has been formed. PERU LNG Company plans to build a liquefaction plant located 169 km south of Lima, Peru.

The plant will produce approximately 4.4 million metric tons of LNG per year and is designed for future expansion in order to accommodate additional new discoveries of excess gas in Peru, as well as to receive possible imports of natural gas from neighboring countries.

The company said the location of the LNG plant at Pampa Melchorita had been carefully selected after extensive environmental review. An Environmental Impact Study was submitted to the government of Peru on July 30, 2003, and public hearings have been scheduled.

Mr. Hunt said, “We are now preparing to enter a new phase of the PERU LNG Company project, which will finalize the ownership arrangements of the company and which also will initiate the LNG project’s financing objectives. We have every reason to believe that, based upon the LNG purchase and sales agreements we announced today, project financing will be obtained in a timely manner.”

The company said that once it has obtained commitments for project financing, the final phase of the project — construction and completion of the LNG liquefaction plant and associated infrastructure in Peru — would begin, and first product delivery would occur in late 2007 or early 2008.

The company said the proposed PERU LNG Company liquefaction plant would have significant economic advantages by being first in the marketplace for export of LNG from the Pacific coast of South America.

Mr. Hunt said that the PERU LNG company is currently in negotiations with other potential buyers for the remaining LNG volumes that will be available from the Peru LNG facility.

Hunt Oil Company is one of the largest privately held exploration and production companies in the world, is based in Dallas, Texas, and is directed by Ray L. Hunt.

In the international oil and gas exploration area, Hunt and its subsidiaries are active worldwide in countries such as Peru, Canada, Oman, Togo, Yemen, onshore United States, and U.S. Gulf of Mexico offshore.

Hunt is the operator of Yemen’s Marib and Jannah blocks, which have produced more than 940 million barrels of oil. Hunt has drilled more than 600 development and exploratory wells in Yemen, and discovered 11 trillion cubic feet of natural gas. In addition to the discoveries, Yemen Hunt’s Central Production Unit separates gas from oil and four natural gas processing plants extract liquid hydrocarbons from 1.7 billion cubic feet of natural gas per day.

The company constructed and maintains a 263 mile export pipeline, built through rugged desert and mountain terrain.

A four hundred thousand ton (3 million barrel) converter tanker serves as one of the world’s largest stationary floating storage and offloading facilities.

PERU LNG Company is the commercial entity responsible for negotiating the development of an LNG project which will utilize gas from the Camisea fields in Peru. Equity investors are currently comprised of Hunt Oil Company of Dallas, Texas, and SK Corporation of South Korea.

Other equity participants in PERU LNG Company will be announced in the near term. Tractebel LNG is based in London and is a business unit of Tractebel Electricity & Gas International. It operates worldwide, leading the company’s expansion of LNG supply activities focusing on both Atlantic and Pacific markets.

It is a business division of SUEZ. Tractebel LNG manages Tractebel's equity stake in the Atlantic LNG facility in Point Fortin, Trinidad, and actively promotes LNG supply projects into Atlantic Basin markets in both the U.S. and Europe.

Tractebel LNG also acts as a short-term deal-maker, currently operating two LNG carriers, the Hoegh Galleon and Excalibur. Tractebel LNG has recently delivered cargoes into North America, Korea, Spain and Japan.


Posted by Richard Price, Editor

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