CC, BPZ Energy (BPZI) -- some more of my thoughts on the geopolitical issues of Peru & Ecuador, as they affect BPZ, are contained in the copy of a recent post I made on IV, below:
Historymaven, all of BPZ's exploration acreage is within the control of Peru, not Ecuador. Its my understanding (based on a little bit of reading) that, although these two countries abut each other, their political structure and economic situations are miles apart. Also, Ecuador is a net exporter of oil whereas Peru is a net energy importer. Part of BPZ's long-term business plan is to export gas to Ecuador, but in that case some other company would be the one operating in Ecuador, and will just be buying BPZ's Peruvian gas from BPZ over in Peru and then piping it over to Ecuador.
The IFC, which is part of a huge organization called the World Bank Group, has approved, subject to their board approval, making a $20 M investment in the stock of BPZ Energy. This organization would not make this size an investment without being very comfortable about the kinds of concerns you raised. The 12/4 PR put out by BPZ said that the IFC board approval was expected in the middle of this month. That means, obviously, that whatever concerns they may have had about the issues you have raised, have been put to rest. Otherwise BPZ never would have got this far with the IFC.
Secondly, the Morgan Keegan report that just came out on BPZ lists several other huge power projects going on in Peru, whose participants include many familiar (and large) names. This gives me further comfort, in that these other large companies considered the investment/political climate in Peru to be acceptable enough to make huge investments in power generation. See an excerpt from the MK report below:
"Other Power Projects
Aguaytia Gas - The 155 mw plant in the central jungle was built by Dallas-based Maple Gas with funding from Trust
Company of the West. The electric transmission line crosses the Andes to the main grid along the Pacific Coast. Gas
from a 400 bcf field fuels the two-turbine gas plant and the balance is converted into NGL's. Power has only been
dispatched for peaking purposes and most of the gas is re-injected because of an increased supply of hydroelectric and
coal-based generation.
The $280 million project includes a 392 km electricity transmission line, a 70 mmcf/d gas processing plant and a 4,200
bbl per day natural gas liquid fractionation facility. Commercial operations began in '98. The heat rate for the plant is
10,750 btu's per kWh for baseload. Gas is sourced from the Aguaytia field 139 km away. Maple used Netherland, Sewell
as the reserve auditor to assess 223 bcfe as "proved" reserves and another 180 bcfe as "probable and possible". The
liquids created are 2,500 bopd of natural gasoline and 1,300 bopd of liquefied petroleum gas.
Partners in the plant are Duke Energy, El Paso, Illinova, PP&L Resource and Panhandle Eastern.
Etevensa - This 492 MW plant is the largest thermal plant in Peru and was converted from diesel to a combined-cycle,
gas-fired generation plant. The plant supports the Camisea gas project as the largest customer of Camisea natural gas.
Etevensa was acquired and merged into Edegel on June 1, 2006. Endesa (ELE) has a controlling interest in Edegel
(through Enersis), owner of 1,284 MW of installed generation capacity in Peru.
Other projects
Suez Tractebel plans to build 180 MW plant 30 miles from Lima that would consume Camisea gas. The plant is expected
to be operational imminently.
EgeChilca is also planning a 520 MW plant in the same area. The Panamanian company could invest $425 million,
consuming Camisea gas and be operational in two phases beginning in 2006."
Lastly, and this is being only partly facetious, if Peru wanted to play the nationalization card on BPZ, why would they do so at such an early stage in their development? Why not let BPZ spend hundreds of millions of $$$ in the country first, then take them over? So, my point is, don't sweat it, we have at least 2 years before we have to start worrying about this sorta stuff. |
