Industry Trend Analysis - Crude Weakness Will Weigh On Liquids Output - MAY 2017
BMI View: Crude production in Peru will remain in decline over 2017 owning to prolonged midstream blockages and inadequate upstream investment. Total liquids output will be supported by strong NGL volumes, offsetting crude losses.
Peru's oil sector is in for another tough year. In 2016, a record 14 ruptures at its 1,100km Northern Crude pipeline suspended output at two of the country's largest oil fields. This, combined with reduced upstream investment by a number of private sector participants, resulted in a 30.6% y-o-y decline in crude production, averaging just over 40,000b/d ( see 'Crude Production Will Remain Limited' , July 12 2016).
We believe sustained midstream challenges will extend the production downturn into 2017. As of February, operations at both blocks 192 and 67 remained suspended as state-owned PetroPeru struggles to restart the damaged pipeline. Output averaged as high as 14,000b/d in block 192 and 6,400b/d in block 67 in recent years, comprising upwards of 30.0% of national production. The blocks have been offline since March and June of last year, respectively.
|NGLs Keeping The Sector Afloat|
|Peru - Total Liquids Produciton, 000b/d|