PERU LNG June 2012 What is PERU LNG

PERU LNG June 2012

What is PERU LNG? • PERU LNG is a Peruvian company that was incorporated in 2003. It consists of four world-class leaders of the energy industry: 50% Hunt Oil Company (USA, operator) 20% SK (South Korea) 20% Repsol-YPF (Spain) 10% Marubeni (Japan)

What is LNG? • LNG is natural gas cooled until it condenses into a liquid. • To obtain LNG, the temperature of natural gas must drop to approximately -163°C. • It consists mainly of methane and ethane. It may contain a minimum quantity of propane and heavier hydrocarbons. • It is a transparent, colorless, odorless, non-corrosive and non-toxic liquid. • It is an environmentally friendly source of energy. • Peru’s natural gas contains a high level of ethane, for which reason it generates more energy. Natural Gas 90% Methane (CH 4) 10% Ethane (C 2 H 6)

Project Description • The Melchorita Plant is located on the Peruvian coast 170 km. south of Lima. • It has involved a total investment of US$ 3. 87 billion. • It represents the largest private investment in a single project made to date in Peru. • It consists of a process train, two LNG storage tanks, and a marine terminal. • A 408 km. pipeline transports natural gas from the highlands (Ayacucho) to the plant.

Route of PERU LNG pipeline

Gas pipeline description Compression at Malvinas Existing Camisea gas pipeline 32” Compression at Chiquintirca 24” ENTRY TO THE CITY OF LIMA 18” 24” PERU LNG’S Built by PERU LNG MELCHORITA PLANT 34” Jungle Highlands Coast PERU LNG’s gas pipeline: • • Pipeline route: from Chiquintirca (Ayacucho) to the Melchorita Plant. Length: 408 Km. Diameter: 34”. Pipeline exclusively used for gas. Almost 160 km of the pipeline (40%) is located at 4, 000 meters above sea level. • Supplies the local market and the Melchorita plant.

Installation of the gas pipeline • The Guinness World Records has certified that PERU LNG’s pipeline is the highest gas pipeline in the world at 4, 901 meters above sea level. • The pipeline traverses 4 regions with difficult and complex geography. • It runs for about 100 km. on the coast and 308 km. in the highlands. • It provides transportation capacity to the local market, in addition to the Melchorita plant. • Nearly 6, 000 local community members took part in the installation of the gas pipeline.

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Storage Tanks • Each tank has a storage capacity of 130, 000 m 3. • Each tank is 78 m. in diameter and 55 m. in height. • These are the largest tanks ever built in Peru. March 2008 • They include a double wall: an inner wall and an outer wall. Insulation material has been placed between both walls to keep the temperature low, at – 163 °C. • Each tank is filled approximately every 5 days. April 2010

Jetty • The jetty includes a 1. 3 km. trestle bridge and a LNG loading platform. • It also includes a 800 m. long x 25 m. wide and 11 m. above sea level breakwater. Dredge is 14 to 18 m. deep • It accommodates tankers with capacity of up to the largest 173, 000 m 3.

LNG storage and shipping • Once the natural gas is in a liquid state (LNG), it is pumped into the storage tanks. • LNG is stored in the tanks at atmospheric pressure until the arrival of the LNG tankers, approximately every 6 days. • LNG is transported along 2 km. of cryogenic pipes that connect the tanks to the shipping vessel. • Each tanker is connected to the terminal by 3 loading arms and 1 steam recovery arm.

Business Profile • • • First LNG shipment: June 22, 2010. To date: 105 tankers loaded 2010: 24 tankers 2011: 55 tankers 2012 to date: 26 (to june) • Repsol Comercializadora is in charge of marketing 100% of the LNG produced at the Melchorita plant. • The destination market of each shipment is decided by Repsol Comercializadora (the off-taker).

Social Investment in the Highlands • Training in agriculture and livestock • 8 agricultural and livestock technologies implemented to improve local income and nutrition. • 272 families from 19 communities have benefited from this program. • Improvement of Camelid Production • Implementation of shearing modules and training in fiber selection. • Introduction of improved alpacas. • Rural micro-finance program: • Support in the design of business plans. • Over 250 women and 12 companies have benefited from this program. • Improving municipal investment skills • Over 300 municipal officers trained. • Installation of potable water and sewage systems in 8 communities in La Mar (Ayacucho). • Two projects have been awarded prizes and will be implemented under a process organized by the central government (Foniprel).

Social Investment on the Coast • Training of small-scale farmers • Analysis of fertilization plans, benefiting 345 farmers whose parcels are smaller than 5 hectares. • Over 39, 000 m 2 of vineyards rehabilitated. • Loans totaling over US$ 40, 000 granted. • Strengthening of small and medium-sized enterprises • Support in the diagnosis and design of improvement plans. • Generation of new jobs and improvement of existing jobs. • Development of commercial linkages between local small and medium enterprises and large companies from the region and Lima. • Sustainable Businesses for Fishermen • Technical assistance in identification and development of sustainable business projects. • Business projects generated in the transportation, trade, livestock, agriculture, fishing and service sectors.

Taking care of the environment • Revegetation of areas along the gas pipeline • Preservation of the top soil for its subsequent replacement. • Training and participation of local people. • Participatory Social and Environmental Monitoring Program along the pipeline route • Over 80 local people participate in the program as monitors. • Community members monitor company practices and report back to their communities. • Biodiversity Monitoring Program • Identification and monitoring of flora and fauna in 14 ecological landscape units. • Collection of valuable scientific information • Implemented in partnership with The Smithsonian Institute.

Preserving our cultural heritage • The PERU LNG archaeological project is the largest private sector archaeological project carried out in Peru to date. • It included the assessment of the 408 -km pipeline route, the Plant site, and the rock quarry. • 277 sites were investigated (137 were rescued an additional 145 sites were investigated as chance findings). • Comprehensive book on the results of the research published, which contributes to expand knowledge of ancient Peruvian history. • 200 archaeologists and over 2000 community members took part in the project.

Historic achievement of PERU LNG • Marks Peru as the first country in South America with a natural gas liquefaction plant. • Reaffirms the country’s position as a preferred investment destination. • Positions the country as an energy leader in the region. • Attracts investment into other areas of the energy industry. • Demonstrates the country’s capacity to implement large projects. • Encourages investment in the energy sector and contributes to reverting Peru’s hydrocarbons deficit.

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