Oil and Gas to Peru

Trends and opportunities

The market

Latin America is set to be one of the fastest-growing regions in terms of oil and gas production over the next decade. Its global share of oil output is said to increase from 11.5 per cent to 12.2 per cent between 2013 and 2022 maintaining a steady 6.3 per cent global share of natural gas production (Source: Business Monitor International, Oct 2014).

Peru has adopted a market-oriented approach to the development of its oil and gas sector and its operating environment remains one of the best in the region. Local participation is competitive and not mandatory. Companies enjoy a high degree of operational independence and investors are given legal guarantees on their investments.

Downstream regulation also permits private companies, both domestic and foreign to own and operate oil and gas stations, gas processing plants, pipeline infrastructure and refineries.

A largely under-explored onshore and offshore acreage makes Peru one of the most attractive oil and gas markets in Latin America.


According to the Ministry of Energy and Mining, proven gas reserves were 422.9 billion cubic metres (bcm) as of 2013, compared to Australia's 1218.7bcm proven gas reserves. Further growth is expected over the coming years as domestic and international companies explore for projects (Source: Ministry of Energy and Mining of Peru, Oct 2014).

Natural gas production in Peru is set to rise from 12.3bcm in 2013 to 15.0bcm in 2018 and 17.8bcm by 2023. Consumption will also continue to rise over the next decade, although at a slower pace than in the past, ensuring its position as a net gas exporter. After the estimated 2013 consumption of 6.3bcm, gas consumption in Peru is expected to reach 8.0bcm in 2018 and surpass 10.6bcm by 2023 (Source: Ministry of Energy and Mining of Peru, 2014).

In addition, Peru's total liquids output is expected to continue rising, buoyed by natural gas liquids, from a total of 174 390 barrels per day (bpd) in 2013 to 194 600bpd in 2018 and 218 000bpd in 2023.


Oil demand, which averaged around 169 990bpd in 2013, is likely to fall over the long term, hitting 172 530bpd in 2018 and 165 740bpd in 2023 due to increasing efforts to move toward gas-generated energy. This means Peru could also become a net exporter of oil (Source: Ministry of Energy and Mining of Peru, 2014).


Australian companies in the oil and gas industry are used to operating in markets with conditions similar to Peru. Australia has expertise and innovative solutions for operating in countries with demanding environmental and safety requirements, remote locations, where energy is expensive and water scarce.

A lack of adequately trained personnel is also forecast over the coming years as new projects come on-stream. This could be an opportunity for Australian providers entering the market.

The Peruvian Government is planning to hold bidding rounds for onshore and offshore oil and gas blocks during the fourth quarter of 2014 and 2015. For more information, visit Peru Petro.

The Peruvian Investment Promotion Agency (Proinversion) has several oil and gas infrastructure and distribution projects that will be tendered in the next few months. In general, Australia has strong offerings that match Peru’s market needs, including:

  • innovation and research and development (R&D)
  • drilling technologies, including offshore and onshore exploration and production (E&P)
  • geophysics
  • pipeline design and construction
  • geotechnical engineering and assessment
  • advanced safety training
  • liquefied natural gas (LNG) processing
  • rehabilitation and facility management
  • energy infrastructure, including subsea infrastructure
  • education and training for the industry
  • environmental related products and services (tailing management, water treatment plants, software)
  • communities engagement consulting
  • hydrocarbons E&P in marine reserves

Peru's recently amended environmental law is expected to support increased exploration, the streamlining of environmental impact studies and fast tracking permit approvals. The new law, which came into force in July 2014, has relaxed regulations governing the extractive industries and offered additional incentives to exploration. Key amendments include:

  • fast-tracked environmental permits
  • streamlined environmental impact studies
  • curtailed jurisdiction of the Ministry of Environment over the extractives industry, including the removal of its power to exempt areas from exploration drilling
  • three year reduction on fines for environmental violations
  • re-introduction of tax breaks.

Competitive environment

There is a strong international presence in the oil and gas industry in Peru. Most players in the upstream and downstream sector, equipment, technology and service providers are multinational or global companies due to the lack of expertise, capital or technology of local players.

There are two Australian exploration and production companies with active projects in the market, as of October 2014. There are also nearly 50 equipment, technology and services companies providing services to the mining sector which could expand to the Peruvian oil and gas industry.

There are a number of challenges to future investment in the Peruvian Oil and Gas sector. Red tape is a significant hindrance to hydrocarbon development. The Peruvian Hydrocarbons Society (SPH) estimates that approximately US$2.5 billion in investments are being held back due to social conflicts and difficulties in obtaining environmental permits (Source: América Economía, March 4, 2014). The National Society for Mining, Petroleum and Energy (SNMPE), says the delay in adopting new oil and gas environmental regulations may discourage investment in the hydrocarbon sector.

Another challenge to future investment is the opposition to hydrocarbons projects from environmentalists, indigenous populations and individuals within various government agencies. In addition, oil and gas companies are still adapting to the requirements of the Previous Consultation Law with indigenous communities, derived from ILO Convention 169.

Tariffs, Regulations and Customs

The upstream sector is governed by the Hydrocarbons Law. Pursuant to this law, exploration and production licences may be granted as either licence contracts (concessions) or service contracts. Under licence contracts, extracted oil and gas becomes the property of the licensee. Resources may be booked as reserves and output sold on both domestic and international markets. Under service contracts, a private company is hired to undertake exploration and production, but resources remain under ownership of the state. Typically, the contracted party is compensated by a share in the output.

Once a contract has been entered into, the Peruvian government is unable to unilaterally alter the terms of that contract. Both local and foreign companies are allowed to bid for licences and no preference is shown for local companies. However, foreign companies must establish a domestic branch or Peruvian subsidiary, before entering a contract. (Source: Business Monitor International)

As of September 2014, a revised version of the Hydrocarbons Law’s regulations proposed by the Ministry of Energy and Mining is being reviewed by the Ministry of Environment. This version looks for a simplification in the administrative procedures for the approval of exploration and production permits with the purpose of attracting new investors to the sector. Complementary measures benefiting oil and gas investors were approved by President Humala in July 2014, with the purpose of reversing the sluggish economic growth of the first semester.

Tax Incentives

Peru boasts an attractive fiscal regime. The taxation structure in effect at the time a contract is signed remains in effect until that contract expires, stabilising taxes across the contract period. A change in ownership has no effect on the taxation structure, as tax stability is, in essence, granted to the licence itself and not the licensees.

The government has developed tax incentives to encourage investment. The main incentives are:

  • If a licensee holds more than one licence, they may offset losses in one licence, against profits in another. Losses can also be carried forward and offset against net income derived in future fiscal years.
  • Projects with significant pre-operating stages are offered financial relief in the form of early VAT recovery.
  • The import of certain goods and inputs used for exploration purposes is exempted from custom duties, and the temporary import of goods and inputs (for no longer than four years) may also be granted tax exemption.
  • Taxes must be paid in Peruvian currency, but other transactions may be conducted in foreign currency.
  • Gas not required for domestic consumption may be sold internationally, and may be exempted from taxes, subject to governmental discretion.

Marketing your products and services

Market entry

As at October 2014, there are over 30 Australian companies providing services to the mining sector that have offices in Peru. Setting up an office is a well-worn path for suppliers wishing to establish a sustainable presence in the Oil and Gas market. Many Australian companies develop a presence by organically growing a subsidiary office from Australia or an existing office in the region.

Others have acquired a local company or developed a joint venture. Relationships are very important in Peru and a local partner can provide valuable connections and networks to decision makers. Some suppliers prefer not to have a presence in Peru, instead preferring to sell into the market through distributors or agents. This approach is less capital intensive, but requires patience and a good local partner.

The best approach depends on the type of business, the appetite for risk, funds available to the company and issues around protection of intellectual property.

Some tips to keep in mind:

  • Oil and gas blocks tenders are promoted by Perupetro, which provides publicly available information free of charge.
  • Infrastructure projects, including the design, finance, construction, operation and maintenance of pipelines, supply systems and facilities are promoted by Proinversion.
  • The Mining, equipment, technology and services industry (METS) is highly competitive and most major multinational vendors are in the market.
  • Setting-up in Peru sends a strong message to customers signalling commitment to the market and will often convert interest into a solid commercial relationship.
  • Given the focus on productivity in the oil and gas industry, prepare a concrete value proposition which demonstrates clearly how your solution has saved customers money in previous projects.
  • Understand Peruvian oil and gas company structures and their process for procurement. To be successful you need to be patient, persistent and polite.
  • It is important to consult with headquarters and the Exploration and Production (E&P) sites while conducting business development. The E&P sites tend to be in remote locations in the Amazon or the northern coast and headquarters tend to be in Lima.
  • Consider participating in oil and gas conferences held in Peru, such as INGEPET or those promoted by the SNMPE or SPH Sociedad Peruana de Hidrocarburos (SPH). They are an excellent way to meet customers and gather intelligence.


Austrade is actively promoting Australian oil and gas policy, as well as the capabilities and innovative solutions that are supporting the oil and gas sector to attain better efficiency and productivity.

The media report on new technology, services and products that respond to Peru’s challenges.

Some tips to help your media promotion:

  • Have communications collateral available on your company in Spanish. This could be a local website and printed collateral i.e. flyers.
  • Customise your value proposition and key messages pitch to match the requirement.
  • Send content to industry media about your company, product and service.

Links and industry contacts

Government resources

Ministry of Energy and Mining
Ministry of Environment (MINAM)

Industry resources

Sociedad Nacional de Minería, Petróleo y Energía (SNMPE)
Sociedad Peruana de Hidrocarburos (SPH)


Revista Horizonte Minero
Revista Oro Negro
Revista Petróleo, Gas & Negocios
Revista ECOMIN

Please note: this list of websites and resources is not definitive. Inclusion in this list does not imply endorsement by Austrade. The information provided is a guide only.

Contact details

The Australian Trade and Investment Commission – Austrade – contributes to Australia's economic prosperity by helping Australian businesses, education institutions, tourism operators, governments and citizens as they:

  • develop international markets
  • win productive foreign direct investment
  • promote international education
  • strengthen Australia's tourism industry
  • seek consular and passport services.

Austrade provides information and advice that can help you reduce the time, cost and risk of exporting. We also administer the Export Market Development Grant Scheme and offer a range of services to Australian exporters in growth and emerging markets.