Aspectos relacionados con las actividades Productivas

Hides field (current production): Consortium of ExxonMobil, Oil Search, Santos Kutubu field (prospective production): Consortium of ExxonMobil, Oil Search, ChevronTexaco,

Japan PNG Petroleum, Orogen Minerals, Mineral Resources Development Company

Gobe field (prospective production): Consortium of ExxonMobil, Oil Search, ChevronTexaco,

Japan PNG Petroleum, Orogen Minerals, Gobe Landowners

Owners and Operators of Gas Transmission and Distribution Pipelines in PNG

Hides field: Consortium of ExxonMobil, Oil Search, Santos

PNG Gas Project (export pipeline): Consortium of ExxonMobil, Oil Search, ChevronTexaco,

Japan PNG Petroleum, Mineral Resources Development Company

GAS MA R K E T RE F O R M GAS MARKET SKETCHES: PAPUA NEW GU I N E A

There is some degree of vertical integration, as well, between Papua New Guinea’s gas and electricity markets. All of the economy’s power is produced and transported by the Papua New Guinea Electricity Commission (Elcom). While four-fifths of this electricity is generated from hydropower, gas is generally the favoured fuel for new power stations, so it plays an important role at the margin.140 Elcom can buy gas from only a single consortium, whose only domestic customer

is Elcom. Thus there appears to be a kind of bilateral monopoly-monopsony situation where the gas consortium may well be able to negotiate to raise its gas prices to Elcom to cover inefficiencies that might arise in gas production, processing, or transportation. There would be little reason for Elcom to resist an increase in gas prices since it could pass on the resulting increase in generating costs in its rates to electricity customers, who have no other source of power.

GAS MARKET REGULATIO N AND INFRASTRUCTURE POLICY GAS TRANSPORTATION INFRASTRUCTURE

Domestically, the transmission and distribution pipelines that are needed to deliver gas to power producers should expand as gas-fired power generation grows. There are no plans to extend a distribution grid to residential or commercial customers since space heating requirements are few, other fuels are used for cooking, and air conditioning can be provided by electricity.

The bulk of planned gas infrastructure investment in Papua New Guinea relates to exports. The PNG Gas Project’s pipelines would extend ov erland for 160 km from the Kutubu and Gobe fields to the port of Kutubu in Papua New Guinea, 515 km under sea to Cape York in Australia, and 1,440 km within the Australian state of Queensland to Brisbane. The pipelines would carry 175 million cubic feet or 4.96 Mcm of dry gas per day for export to Australia.141

INFRASTRUCTURE INVESTMENT INCENTIVES

Papua New Guinea’s incentives for investment in transportation infrastructure for domestic gas use and exports appear to be adequate. Since prices for exported gas are market-determined, the planned gas export pipeline ought to succeed if its gas would be economical relative to other sources of gas supply in Australia. Domestically, the transportation consortium can charge Elcom an ample price for gas, given its monopoly on gas supply and Elcom’s ability to pass its fuel costs on to electricity customers. Thus, it can easily earn a good enough return on the limited network of pipelines that is required to deliver such gas to make any needed network expansion worthwhile.

140 _{High Commission of Papua New Guinea, Canberra (2001).} 141 _{IEEJ (2002a), pages 387-8. Pipe Line & Gas Industry (2001).}

P E R U

GAS MARKET SETTING142

Peru produces a small but rapidly growing amount of natural gas that makes the economy entirely self-sufficient in domestic gas supply.

n Production and primary supply of gas are projected to increase from 1.0 Mtoe in

2000 to 7.4 Mtoe in 2020, with very rapid demand growth of 16.8 percent per annum from 2000 to 2010 and further demand growth of 4.9 percent yearly from 2010 to 2020.

Figure 56 Evolution of Natural Gas Use in Peru, 1980-2020

0.1 0.6 0.9 2.8 0.5 1.2 0.0 0.1 0.4 3.1 3.3 0.0 0.5 0.3 0 1 2 3 4 5 6 7 8 1980 1990 2000 2010 2020

Million Tons Oil Equivalent

Other

Residential

Commercial

Industrial

Electric

Almost all of Peru’s natural gas use is currently devoted to electric power generation and oil refining. Substantial gas use is anticipated in the industrial sector, but not the commercial or residential sector.

n Use of gas for electric power generation is projected to grow rapidly, quadrupling

from 0.6 Mtoe in 2000 to 2.8 Mtoe in 2020. But the power sector’s share of gas demand would drop sharply from 63 percent to 38 percent with the introduction of gas for industry and gas liquefaction.

n Industrial use of gas, which was nil in 2000, is projected to grow to 1.2 Mtoe by

2020, accounting for a 17 percent share of the gas market.

142 _{Data from APERC (2002a) and more detailed internal energy balance tables. Historical data for 1980 and 1990 were} compiled by the International Energy Agency (IEA). Projections for 2000, 2010 and 2020 were made by APERC.

GAS MA R K E T RE F O R M GAS MARKET SKETCHES: PERU

n Use of gas for non-electric energy transformation is projected to grow from 0.4

Mtoe in 2000 to 3.2 Mtoe in 2020, so that “other” use (including some for transport) grows from 36 percent to 44 percent of the market.

G A S M A R K E T S T R U C T U R E AND OPERATION GAS MARKET PLAYERS

Several different private companies are involved in the production of gas in Peru. However, they are organised into two consortia, each of which has sole rights to produce gas from a particular field for 40 years. The Aguaytia field began commercial operation in 1998 at 55 million cubic feet (1.56 Mcm) per day. The Camisea field should operate by 2004 at some 6.5 Mcm per day.

Gas transmission and distribution of gas in Peru is also performed by two consortia, each of which has been granted rights to transmit and distribute gas from a given field for 33 years. In each case, the transmission and distribution consortium for a field includes the same participants as the production consortium, though it also includes additional participants in the Camisea case.143

UNBUNDLING AND THIRD PARTY ACCESS

The gas market functions in Peru are not effectively unbundled. While the consortia for gas production are distinct from the consortia for gas transmission and distribution, they have many of the same participants. There are no legal requirements for information firewalls between them, so they are not functionally separate in any true sense.

In theory, gas concessions provide for open access to transmission and distribution grids. However, it does not appear that a regulatory apparatus has been put in place to ensure such access in view of the fact that transmission and distribution consortia have a business incentive to discriminate in favour of the associated production consortia which have many of the same owners.

143 _{Ministry of Energy and Mining (2003).}

PRINCIPAL PLAYERS IN PERU’S GAS MARKET