Peru: Gas connections
Several initiatives launched last month aimed at expanding the supply of and infrastructure for natural gas and liquefied petroleum gas (LPG) are part of a growing drive to increase the use of gas in Peruvian homes as a cleaner and more affordable alternative to wood burning. However, the lack of a “gas culture” in Peru may require more extensive long-term efforts be taken to educate consumers, in addition to making gas more readily available.
In late March, Congress approved a new energy security law intended to support the development of natural gas infrastructure and use. The new law also established the Fund for Energy Social Inclusion (FISE), which includes $19m in funding to provide gas connections and supply to the country’s poorest homes.
Shortly after the law was passed, the Ministry of Gas and Mines announced a plan to connect 100,000 homes annually to the natural gas supply, with the ultimate goal of establishing approximately 400,000 new home connections over the next four years.
Jorge Marino, the minister of gas and mines, informed local press that to reach this goal, the ministry may pursue an initiative to work with technical institutes in Lima and the provinces to train and certify young people in hooking up domestic gas connections. Marino said they are also working with the Ministry of Housing to ensure that new social housing developments come equipped with connections.
Part of the same programme includes a subsidy for the domestic use of LPG tanks in low-income urban areas. In rural areas, the cost of kitchen LPG tanks will be subsidised to encourage take-up.
In Cusco, the South Andean Pipeline is the country’s latest natural gas project. The 1085-km network will transport gas from the Camisea fields in Cusco south through Arequipa to the coast. PetroPerú, the state-owned petroleum company and a 20% shareholder in the South Andean Pipeline project, recently signed a letter of intent in which the regional government of Cusco committed to promoting increased usage of natural gas.
While the pipeline is not scheduled to begin construction until June 2013, the Qosqo Gas Project, also being developed in Cusco, should come on-line in October of next year. Qosqo will use specially equipped trucks to transport liquefied natural gas (LNG) from the Perú LNG plant in Ica to another plant, where it will be prepared for domestic and commercial distribution.
Meanwhile, President Ollanta Humala continues to push the Camisea Consortium, which is in charge of developing the country’s gas fields, to agree to use Block 88 exclusively for the Peruvian market. If a deal is struck, which Humala claims is “one step away” from happening, Peruvians would be guaranteed gas at much cheaper prices for the next 20-30 years.
There are concerns, however, that the Peruvian people may not be ready to use gas as a primary source of energy. While natural gas is already being used substantially for electricity generation, industry, and to some extent automobiles, connections are rarely found in homes.
According to a 2010 World Bank survey, only 14% of Peruvian households used LPG tanks at home. Nationally, wood fuel (84%) and dry cell batteries (74%) were the most-popular forms of energy.
While the initiatives currently in the works and others in the pipeline will ensure that more Peruvians than ever before will have access to natural gas connections in the years to come, equally important may be efforts to assure and educate users about the benefits of this new energy infrastructure.