Peru needs more gas, renewables -Interview with Energy Minister
Ministerio de Energia y Minas
Peru's Energy and Mines minister Ivan Merino
By Lucien Chauvin / Argus
Petroleumworld 08 18 2021
Peru's new left-wing administration headed by President Pedro Castillo wants to restore the prominence of state-owned PetroPeru in the oil and natural gas sectors and expand renewable power. Energy minister Ivan Merino, a former social consultant, shared his vision with freelance correspondent Lucien Chauvin in Lima.
What is your vision for PetroPeru?
We are going to strengthen PetroPeru. This means restructuring it, because it has many limitations. We have to fix it first if we are going to improve it.
What do you mean by fixing it?
We need to make it more efficient. It has to be like any other company, with clear procedures, effective and efficient management. It needs to be agile and transparent. We believe in public companies and many of the major oil companies in the world are public. We want public companies that generate revenue for the state, not employment for the party in power.
President Castillo has talked about vertical integration of PetroPeru. Does this mean taking over production blocks?
We are in the process of gathering information to make informed decisions on our next steps. We need to evaluate our financial and human resources. We want PetroPeru to be a large strong company, but we need to have our priorities straight. We need to look at profitability sector by sector, including the (Talara) refinery, northern oil pipeline, production blocks and other divisions. This is what a private company would do.
The issue of production blocks goes to the heart of energy transition. Some major companies are already saying that they are moving away from oil. What is the case here?
I do not believe that the change in the energy matrix is around the corner. I think we need to see what happens with electric vehicles, for example, and advances in other areas. We are going to see major changes in the rest of this decade, but we cannot get ahead of ourselves. We can still talk about oil for now, but if you start thinking about 2050, then it is a different case altogether.
Natural gas has a bigger role than oil in Peru today, but new reserves have not been discovered for many years. What should be done about this?
The first thing is exploration. We need to explore to find reserves. This can be done by both the private and public sector. Part of the problem with declining production and failure to explore has to do with social conflicts, which is a product of inefficient state management and mistakes by private companies.
We need to guarantee that agreements that have been reached by the state or companies with communities are respected. Many agreements have been signed, but few have been implemented. This leads to resentment. We need clear rules, not favorable or unfavorable rules, to guarantee a stable operating climate that allows for exploration and production.
What about LNG exports?
Everything is on the table. The goal is to increase the use of gas in the country, and we want to make sure the population has access to gas at a reasonable price. We need to figure out how to get this done.
Is there a plan to promote more renewable energy to reduce gas use for power generation?
We have to stop using gas for power. This is obvious. We need to be more aggressive with renewables. We have solar capacity in the south of the country, and along the coast there is wind. Studies have shown that the southern highlands have strong geothermal potential.
The first geothermal law was approved in 1997, but there are no projects.
The government wants this, but first we need to figure out who would be in charge of it. We could create a specialized agency or possibly a new renewable energy division within PetroPeru like other private and public oil companies are doing.
We are not opposed to a public-private partnership or a different kind of long-term joint venture. There are many formats that can be used. What we want for the country is a basket of renewable resources that will provide energy security in the future.