Oil & Gas in Peru: Past, Present & Future Rio de Janeiro, March 2009 Dr. Daniel Saba de Andrea Chairman of the Board PERUPETRO S.A.

A little of history: In Peru oil extraction and utilization began more than 10 centuries ago, when the natives used oil from outcrops or superficial reservoirs in the Northern Coast and in the South Highlands. Oil was used mainly for roads and buildings as well as for home and medical applications.

First Oil well drilled in South America A tubular well which discovered oil at 24 meters depht was drilled in November 1863 in the Tusillal stream, Zorritos, Tumbes, Northern Coast of Peru. This well, that began producing 60 barrels per day of 35° API oil, was the first well drilled in South America, and one the first succesfully drilled worldwide.

Peru is located within one of the most prolific mega tendencies in hydrocarbons in South America, the subadean southamerican megatendency. Fuente: Adaptado de USGS

The areas with hydrocarbon potential in Peru are included in 18 Sedimentary Basins.

Hydrocarbon exploitation in Peru has been developed during 140 years. Productive areas are located in four areas of the territory: Northern Coast since Central Jungle since Northern Jungle since South Jungle since Costa Norte

Peru, Milestones in Hydrocarbon Industry 1863: First well drilled in South America, Zorritos Field, Tumbes, Northern Coast. 1869: First well in Negritos, Talara. 1939: First well and production Agua Caliente Field, Central Jungle. 1959: Belco and Peruvian Pacific, first offshore well, Northern Coast. 1971: Discovery of Corrientes Field, North Jungle. 1977: Starts Northperuvian Pipeline Operation : Discovery of Camisea gas fields. 1993: Establishement of PERUPETRO 2004: Starts production of Camisea Gas Fields.

Discoveries in Peru Talara Selva Central Zócalo Selva Norte Selva Sur Camisea Selva Sur Pagoreni Million Oil Barrels Equivalent As exploration activity increases, new hydrocarbon discoveries appear.

Peru, Oil Historic Production

Present times:

Peru is performing promotion and contracting campaigns in order to intensify the Hydrocarbon Exploration. Abril, 2008, 83 Contratos (64 Ex, 19 Prod) Dec 31, Contratos (14 Ex, 17 Prod.)

An evident new virtuous cycle of oil contracting began in It is estimated 100 Contracts in force for CONTRACTS IN FORCE Fuente: Elaboración Propia

Area Contratada 18 SEDIMENTARY BASINS MM Ha MM acres Total Area Areas Under Contract Areas under Negotiation Intangible Areas Areas under Agreement Available Areas % Free areas for contracting % 18 SEDIMENTARY BASINS MM Ha MM acres Total Area Areas Under Contract Areas under Negotiation Intangible Areas Areas under Agreement Available Areas % Free areas for contracting %

There are 79 contracts in force in Peru and 70 companies working as contractors, within we can mention the following: Petrobras, Repsol, Pluspetrol, Hunt Oil, Talisman, Perenco, Conoco-Philips,SK Corp., CNPC (Sapet), Sonatrach, Tecpetrol, Which Companies Operate in Peru?

Reactivation of drilling and production activities allows to maintain production of mature fields. Start of Camisea Natural Gas Liquids Production in June 2004, overturned the declining tendency of production. LIQUID HYDROCARBON PRODUCTION

Production – Natural Gas Sales Production of Camisea Natural Gas originated a sales sustained growth. Sales of Camisea increased in average 50% per year since 2006, which originated an important change in energy consumption.

PERU – LEGAL FRAMEWORK ORGANIC LAW OF HYDROCARBONS In force and without changes since The property right over hydrocarbons is transferred to the Lincensee at the moment of entering into a License Contract. Contract-Law, ratified by the Ministry of Economy and Finance and the Ministry of Energy and Mines. License and Services Contracts ruled by private law. Contract Term of 30 years for Oil and 40 for Gas.

PERU – LEGAL FRAMEWORK ORGANIC LAW OF HYDROCARBONS Contractor tiene libre disponibilidad de los Hidrocaburos y puede exportarlos libre de todo tributo. La importación de bienes e insumos para la fase de exploración, se encuentra exonerada de todo tributo. Devolución anticipada del IGV durante la etapa Exploratoria. El Estado garantiza los regímenes cambiarios y tributarios vigentes a la fecha de celebración del Contrato. El Banco Central de Reserva garantiza a las Empresas la disponibilidad de divisas

MILESTONES AGUAYTIA NATURAL GAS PILOT PROJECT CAMISEAS NATURAL GAS INTEGRAL PROJECT (Block 88) INTEGRATION OF ELECTRICAL GENERATION WITH NATURAL GAS OPENING OF NATURAL GAS MARKET PAGORENI NATURAL GAS PROJECT (Block 56) PROJECTS IN EXECUTION PROJECT OF LIQUIFIED NATURAL GAS FOR EXPORT GAS PIPELINE PROJECTS TO SOUTHERN REGIONS. DEVELOPMENT OF NATURAL GAS IN PERU

CAMISEA PROJECT CAMISEA PROJECT ECUADOR COLOMBIA BRASIL BOLIVIA CHILE Lima PERU Acre Titicaca Lake REFERENCIAS GASODUCTO DUCTO LIQUIDOS PLANTA CRIOGENICA PLANTA DE FRACCIONAMIENTO GAS LIQUIDOS Camisea NAFTAEXPORTACION LPG EXPORTACION LPG EXPLOITATION äCamisea Gas Fields äGas Processing in Malvinas - Camisea äGas Liquids Fractionation in the Coast (Pisco) äGas Pipeline: Camisea - City Gate in Lima äGas Liquids Pipeline: Camisea – Pisco DISTRIBUTION äGas Distribution Network in Lima and Callao TRANSPORT PROJECT IN OPERATION SINCE JUNE 2004

Export Project (Perú LNG) 6,1 4,2 TCF Proven and Probable Reserves (at Medium Term) and Natural Gas Demand (Period 2008 – 2027) Blocks 88, 56, 57, 58 and other Local Demand (20 Years) Total 35 TCF Total 10,3 TCF ReservesDemand

LNG Project Operator: PERU LNG Start of Operation: Year 2010 Status: In construction Main facilities: LNG Plant New Gas Pipeline (Expansion) Dock and loading facilities Investment Performed: 2,200 MMUS$ Total Investment: 3,800 MMUS$

A PROMISING FUTURE

As consequence of intensive promotion and international biddings , PERUPETRO will have more that 100 contracts signed in At present investments are mainly focused in heavy oil production in the North Jungle and Natural Gas and Condensates production in Camisea and adjacent Blocks. There will be an important increase of exploration investment in different areas of the country. CONTRACTED AREAS

GREAT NATURAL GAS POTENTIAL Camisea and neighbouring areas, Peruvian South Jungle Proven reserves of Natural Gas are 16 TCF, however the area has a Gas Potential (probable and possible reserves) of additional 35 TCF.

HEAVY OIL DISCOVERIES OIL DISCOVERIES IN NORTH JUNGLE

Heavy Oil in North Jungle Development of new areas Within million barrels discovered between in Blocks 39 and 67. Blocks 39 and 67 partially explored. Potential of additional resources of more than 500 million barrels. In 1970 and MMB were discovered in Block 1-AB.

TALARA BASIN Cum. Production: 1,400 MMBO 13,200 WELLS Production: 30,000+ BOPD BASIS FOR THIS STUDY: Potential undiscovered hydrocarbon reserves in both basins: UP TO 2,000 MMBO (70%+ OFFSHORE). First Oil well drilled in TUMBES & TALARA BASINS, Offshore & Onshore exploration in old and new areas

Hydrocarbon Net Export since 2012 year. Production increase mainly due to heavy oil and Natural Gas Liquids. Fuente: Elaboración Propia Liquid Hydrocarbons Estimated Production

In 2004, started commercial production of Camisea Natural Gas. In 2010, Peru will be the first exporter of liquified natural gas of the region. ESTIMATED PRODUCTION – NATURAL GAS SALES

Up to 2008, Hydrocarbons represent the 5% of GDP of Peru. Al thought the world financial crisis it is estimated a GDP growth of 4.0 % in 2009, and 7% in the following years. Increase of contracts, investment, and future production shall increase participation of hydrocarbons in the GDP up to 8.6% since Peru is in the way to became a net hydrocarbon exporter in approximately 4 years. Possibilities to use natural gas in new industries as Petrochemistry, will place Peru as exporter in South America. The execution of the Liquified Natural Gas Project will place Peru as the most important hub of Pacific - America. Full force of a competitive contracting scheme, macro economic stability and legal safeguards of the country contribute to the present and future succes.

MUCHAS GRACIAS THANK YOU VERY MUCH Daniel Saba De Andrea