Late Tuesday, the US Federal government’s Trade and Development Agency announced that it had awarded a $1.3 million grant to Perupetro, the Peruvian government’s state-owned oil and gas company, to promote “private investment” in Peru’s oil and gas industry.
‘Scuse me. I gotta stop laughing over this.Okay, I’ve regained my composure. According to the agency, $700,000 of the grant will be used to gather “geological, geophysical, and economic datat to identify the eight most promising new on-shore blocks to offer for commercial development.” The remainder will be used to create “an integrated geochemical database” and “definition of petroleum systems in Peru’s hydrocarbon-bearing sedimentary basins.”
Okay, while Peruvian oil output has steadily declined to an average of 94,000 b/d in 2004 from a high of about 196,000 b/d in 1982 (the country is a net importer of crude), it sits on a fairly generous reserve of natural gas — about 7 trillion cubic feet. Several large (and yes, state-owned) Chinese oil companies have invested in oil production in Peru, as have Occidental Petroleum and Harken Energy, to name a few of US investors. A major consortium of international firms are participating in the Camisea natural gas project, which will eventually make Peru a net exporter of liquefied natural gas. Mexico, the US, and China are the most likely customers.
The resources are there. There does not appear to be any significant demand in Peru to alter the 1991 investment law and increase both state participation and the state’s take from foreign oil and gas operations (unlike, say, what has recently happened in Venezuela and Bolivia). So the incentive is there too.
So why the grant? Easy. So some American company can get the contract. Why actually work and compete when cash and privilege can be pried from Unlce Sam’s overly generous hands? And making sure an American firm has physical possession of whatever data the surveys create could help improve the chances that an American company, as opposed to a Chinese one, can get a concession for further upstream investment.
Halliburton has got to be involved in this somewhere…
UPDATE: Halliburton CEO Dave Lesar told shareholders in Houston today that higher oil prices have not hurt the company’s bottom line.
“Clearly at least the short-term slide back in commodity prices doesn’t seem to have had an impact on our US business. Our customers certainly still have plenty of cash flow,” Lesar told reporters after the company’s shareholder meeting.
Customers? Plenty of cash flow? Oh, they would be US taxpayers, from whom that “cash flow” is extracted at gun point.
9:51 am on May 18, 2005
