Peru - Petroleum Production Enhancement Project

Document of . L The World Bank i I FOR OFFICIAL USE ONLY Report No. P-3371PE REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN IN AN AMOUNT EQUIVALENT TO US$81e2 MILLION TO PETROLEOS DEL PERU, S.A. WITH THE GUARANTEE OF THE REPUBLIC OF PERU FOR A PETROLEUM PRODUCTION ENHANCEMENT PROJECT July 22, 1982 This document has a restricted distribution and may be used by recipients only in mw- their official duties. Its contents may not otherwise be disclosed witlout World Bnk authorizaton.  CURRENCY EQUIVALENTS The exchange rate is being adjusted daily roughly in line with the differential between domestic and international inflation. The exchange rate and currency equivalents in 1981 and as of June 1, 1982 were as follows: Currency Unit = Sol (S/.) Calendar 1981 June 1, 1982 US$1 SI. 426.60 S/. 644.04 S/. 1 US$0.0023 US$0.0016 S/. 1,000 US$2.34 US$1.55 FISCAL YEAR January 1 to December 31 ABBREVIATIONS bpd - Barrels per day COFIDE - Corporacion Financiera de Desarrollo (National Development Finance Corporation) ERP - Economic Recovery Program IDB - Inter-American Development Bank IPC - International Petroleum Company MEM - Ministerio de Energia y Minas (Ministry of Energy and Mines) MW - Megawatt PET1FOPERU - Petroleos del Peru, S.A. (National Petroleum Company) TOa - Tons of oil equivalent USAID - United States Agency for International Development  FOR OFFICIAL USE ONLY REPUBLIC OF PERU PETROLEUM PRODUCTION ENHANCEMENT PROJECT LOAN AND PROJECT SUMMARY Borrower: Petroleos del Peru, S.A. (PETROPERU) Guarantor: Republic of Peru Amount: US$81.2 million, including a capitalized front-end fee. Terms: Repayable in 17 years, including four years of grace, at 11.6 percent interest per annum. The Government of Peru would charge PETROPERU a guarantee fee of 1.2 percent per annum. Project Description: The objectives of the project are to increase proven oil reserves and the production level in PETROPERU's Laguna-Zapotal fields on the north coast'of Peru and to improve the company's capa- bility to prepare and implement petroleum develop- ment projects. These objectives would be accom- plished through the provision of: (i) equipment and infrastructure as well as drilling and project management services for 1.59 new wells to be drilled and 76 existing wells to be reactivated in the Laguna-Zapotal fields; (ii) training for PETROPERU's staff; and (iii) consultants' services to assist PETROPERU in project supervision and to study ways of optimizing the exploitation of the Laguna-Zapotal fields and prepare production enhancement projects in adjacent areas. The proj- ect faces no special risks. The Laguna-Zapotal fields have a long production history and an experienced international. project management service company would be contracted by PETROPERU to assist in executing the project in an efficient manner. |This document has a restricted distribution and may be used by recipients only in the performance of |their official duties. Its contents may not otherwise be disclosed withoijt World Bank authorization.|  - ii - Estimated Costs (including about US$24 million equivalent in local taxes and duties): Local Foreign Total -US$ millions-- A. Production Enhancement 69.7 112.9 182.6 (i) Infrastructure 4.3 5.3 9.6 (ii) Well completion and pumping equipment 23.8 31.5 55.3 (iii) Drilling and well services 40.5 64.8 105.3 (iv) Project management 1.1 11.3 12.4 B. Consultant's Services and Training 0.5 2.7 3.2 Base cost 70.2 115.6 185.8 Physical contingencies 7.0 11.6 18.6 Price contingencies 12.4 23.2 35,6 Total project cost 89.6 150.4 240.0 Front-end fee on Bank loan - 1.2 1.2 Total financing required 89.6 151.6 241.2 Financing Plan: Local Foreign Total --------US millions---------- Bank --- 81.2 81.2 PETROPERU 40.0 --- 40.0 Export Credits --- 60.0 60.0 Commercial Banks 49.6 10.4 60.0 Total 89.6 151.6 241.2 Disbursement Estimate: Bank FY 1983 1984 1985 1986 1987