Economic Evaluation of Projects

“Sustainable Extraction of Natural Gas in the Sea of

Ancash (Blocks Z-67 and Z-68)”
Professor: Carlos Gonzáles Taranco 
Group members:
● JIMENEZ PAUCAR, ALI JHOSEP
● RIVERA PEREZ, JULIO JOAB
● HUAYUNGA VALDIVIESO, SHARON NICOLE
● ANFOSSI VERGARAY, GIACOMO
GENERAL ASPECTS
1.1 Name of the Project
1.2 Formulator and Executor Units
1.3 Involved entities and Beneficiaries Participation
1.4 Framework
IDENTIFICATION
2.1 Diagnosis of the current situation
2.2 Definition of Problem and Causes
2.3 Objective of the Project

FORMULATION AND APPRAISAL

3.1 Definition of the Assessment Horizon of the Project
3.2 Supply and Demand Analysis
3.3 Technical Planning
3.4 Costs
3.5 Social Assessment
3.6 Sensitivity Analysis
3.7 Sustainability Analysis
3.8 Environmental Impact
3.9 Execution Plan
3.10 Institutions and Administration
3.11 Logical framework of the eventually selected option
3.12 Middle and long term Plan
CONCLUSIONS
REFERENCES
I. - GENERAL ASPECTS

Nowadays the world is replacing traditional fuels for cleaner and eco-friendly
energies, this due to the big environmental alert as a consequence of extreme weather
and climate phenomena in all regions of the world that is bringing environmental
pollution. One of the clean energy options is natural gas, which produces less carbon
dioxide, which reduces greenhouse gas emissions, generating less pollution because it
does not contain sulfur or lead.

In Peru we have proven natural gas fields, one of them is Camisea, currently the
main natural gas field in Peru, located in the jungle of Cusco, which distributes natural
gas to Lima and Callao. Following this line, the present project tries to implement a
long term sustainable scheme from the exploitation to the distribution of natural gas in
the north of the country discovered in lots Z-67 and Z-68, in the sea of Ancash, which
includes challenges but numerous benefits to the environment and to the society that
will be explained in the development of this document.

1.1 Name of the Project

For this project we chose one of the most important discoveries for the country
in recent years, which is the sighting of natural gas in lots Z-67 and Z 68 in the Ancash
Sea, which is a strong point for our country due to the importance of said hydrocarbon
for our economy due to its direct and indirect relationship with transportation, tourism,
exports and imports, among others.

1.2 Formulator and Executor Units

The director of PetroPerú, Seferino Yesquen, who is in charge of the expansion

and implementation of new technologies in this new exploration and exploitation
project, also reflects the confidence of investors in Peru despite the pandemic situation,
projects that they lead to the promotion of the commercial, logistical and economic
development of the country, which are key to the economic reactivation of Peru.

It is also known that a pre-agreement has been signed with Tullow Oil for
extraction, who have previous experiences in this type of situation since they have
carried out similar operations in Jamaica.
 Likewise, with respect to a negative impact on fishing activities in this area of
Ancash, it has been found that both activities can coexist, citing for example the case
that occurs in Brazil and Norway, where both activities, thanks to new ecological and
Sustainable activities have been able to minimize the impact and allow the marine fauna
and flora to be maintained, as well as these exploratory operations have already been
carried out in the north of our country.

The implementation of new technology in this project is of vital importance

since it would set a precedent for future extractions and also future contract signatures,
emphasizing the importance that these lots of natural gas would have for the Peruvian
economy, due to the contractual situation of the Gas from Camisea, its main market
being abroad. Therefore, the negotiation of the exploitation contract for lots Z-67 and Z-
68 should be for the national market, which would facilitate the arrival of natural gas to
all corners of the country and also the decrease in the price of said material.

Although it is true to operate in the sea is very expensive, the drilling of each
well in the sea costs 100 million dollars, this investment become responsibility of the
company. Therefore, it would leave room for foreign investment in Peru, job creation
and also the attraction of international capital such as the Cerro Verde mining company,
which has already shown interest in this project.

1.3. Involved entities and Beneficiaries Participation

The exploration of Lots Z-67 and Z-68 is a mixed infrastructure project. It is of a

mixed nature because both the Government and the private sector will be in charge of
its execution.

In turn, PERÚPETRO specified that since August 2019, in compliance with the
Regulation of Citizen Participation for Hydrocarbon Activities (Supreme Decree No.
002-2019), the process of Complementary Measures of Citizen Participation began in
the coastal strip of the Ancash Region through Lots Z-67 and Z-68, located 50 miles
from the coast.

Following this, PERÚPETRO coordinated with the local authorities to carry out
these events, where the participation of more than 1,000 residents was registered.
 In January 2020, PERÚPETRO sent the Ministry of Energy and Mines the
respective Report (which includes the social report of the Complementary Events of
Citizen Participation), in order to authorize the signing of the contract for Lots Z-67 and
Z-68.

The approval of the License Contracts for the Exploration and Exploitation of
Hydrocarbons in Lots Z-67 and Z-68, opens an important door to Ancash's energy
development, economic growth and competitiveness. PERÚPETRO reaffirms its
commitment to the sustainable use of our energy resources for the development of the
country, without affecting artisanal fishing activities, promoting responsible operations
with high socio-environmental standards.

1.4 Framework

In the first place, we can begin by defining what a megaproject is, using
the definition provided by the Comptroller General of the Republic, which mentions
that these megaprojects are "investment projects with an infrastructure or work
component whose updated investment amounts are equal to or higher to S /. 325
million; investment projects executed under the Public Private Alliance modality; and
investment projects with an infrastructure or work component that, due to their
specialty, complexity or socioeconomic impact, must be controlled within the
Megaprojects segment " . (CGRP, 2020)

What is sought is to review the efficiency with respect to infrastructure projects

in the country, at which time the so-called megaprojects have been presented, which has
led to the discussion of whether the expected advantages of this modality of developing.

The study investigated that in the last twenty years of projects in Peru,
unfortunately, the expected advantages of saving financial and bureaucratic efforts to
the State have not been achieved in most of the projects. The lack of adequate pre-
investment studies at the feasibility level, added to the precarious study of the various
conceptual engineering alternatives for the projects, causes serious deficiencies in their
development.

This situation causes an unnecessary increase in the investment costs foreseen in

the initial plans, in addition to the lack of timely forecast regarding the need for
expropriations. Finally, it is recommended to review the policy and regulations on the
development of projects through concessions, and it is proposed, as requirements to
carry out a megaproject, that the project have complete feasibility studies, that in no
case the application of co-financing it is allowed since it causes indebtedness and 100%
of the profit that should be generated is lost.

II. - IDENTIFICATION
2.1 Diagnosis of the current situation

The current situation of natural gas in Peru is complicated due to the current
political situation with the rise in gas balloon prices in addition to the rise in
international currencies such as the dollar and the price of gold. There are many factors
for the rise of this resource.

Today, the main source of energy is mining, that is, through the extraction of
minerals such as oil and natural gas If we had to put a value to all the mineral reserves
that are registered today throughout the country, we would obtain an average of USD
1,142 billion, that is, almost six times our gross domestic product (GDP). Most of these
reserves are located in the south, precisely in the mining corridor that runs parallel to the
gas pipeline.

The importance of the Camisea project as an energy source is reflected in the

reserves of this hydrocarbon. According to MINEM, 96% of the proven natural gas
reserves in Peru as of December 31, 2007 correspond to lots 88 and 56 (Pagoreni),
operated by the Camisea Consortium. The evolution of the controlled production of
natural gas has also benefited from the higher price of oil. Natural gas thermal
generators are the main demanders and have determined the significant growth in the
production of this hydrocarbon

At the hydrocarbon level, the Camisea reserve is equivalent to almost 3 billion

barrels which, in turn, have a value of almost USD 180 billion. That is almost the same
as our current GDP. It is urgent to develop a natural gas pipeline in the south of the
country to make better use of this material, promote mining and forge the energy
distribution system that we will need in the coming decades. Therefore, a project of this
magnitude is of vital importance for our national reality since it would decentralize the
production and extraction of said material and could reach many more regions of our
country. Which would have positive effects on our economy since it would lower the
price of the gas cylinder and allow more Peruvian families to have access to this good.

2.2 Definition of Problem and Causes:

● Problem Definition:

Increase the number of users who enjoy the natural gas that Peru has and carry
out an ecologically viable extraction of the resources discovered in the Ancash Sea (Lot
Z-67 and Z-68) with an investment of 1000 million dollars, thus contributing to the
development of the country. Give direct impact to the business units in said department
and related to their operation, extraction, job creation, as well as indirectly impacting
the supplier and support industries of said business units, as well as being able to
generate direct and indirect jobs.

● Causes:

Facilitate trade, foreign investment and the production of natural gas for the
benefit of various sectors of the economy in pursuit of the development of the country:

1. Commerce:

It could be distributed and marketed efficiently throughout the country, this

being the main end market for this resource. Because the main market for Camisea Gas
is abroad, which increases the price of gas that returns to the country, because it is
imported.

2. Foreign investment:

This type of project generates and increases the confidence of investors in our
country, since this type of large infrastructure projects promotes the generation of jobs
and wealth for the country and investors.

3. Production:

It would proceed to the industrialization of said benefited regions and also the
opening of new production sectors which, as we have mentioned, would generate new
jobs and greater effectiveness.
2.3 Objective of the Project

The main objective is in the first place the ecological extraction by means of
new technologies of the resources to be exploited for the redistribution of said resources
in the national market.

III. - FORMULATION AND APPRAISAL

3.1 Definition of the Assessment Horizon of the Project

The horizon of our project is to analyze the development plans for the next 5
years, however you know that the duration of the project will be extended to have the
highest precision and best possible estimate, in the project we identify a latent need
which is the correct distribution of the natural gas in our country, and much more in
these times due to the current situation and as we have been able to analyze the price of
said hydrocarbon has increased. Therefore, it was possible to specify the existence of
this opportunity to carry out an industry that we know will be profitable with the
passage of time.

3.2 Supply and Demand Analysis

3.2.1 Demand description

Currently, Peru has increased the use of gas at the national level, and this is
because there are programs that promote the use of gas, that is, in March 2020 the gas
project for everyone in the district was enacted from Santa Anita, who managed to
install more than a thousand gas supply boxes in each home.

Since this would benefit housewives, in the recurrent use of gas. Likewise, we
can say that this project explained the ways in which gas works as well as for
showering, cooking and the heating system is for the winter season.

Finally, to determine our demand, we need historical data on gas consumption

nationwide for years, on which we will focus from 2007 to 2019.

3.2.2 History information

We will focus on Gas consumption per family throughout Peru from the period
2007 to 2019, in order to obtain demand with respect to GDP. Since this dependent
variable.
 Table N°1: Historical Demand per family

Source: Own elaboration

3.2.3 Demand Projection

For the projection of demand, we will project from 2020 to 2025, to have a
better reference to what we are focusing on.

From the data collected we obtain the following results; Y= 0.0149+0.0007x and
R²=0.7047

,a=0.00072881 ʌ b=0.01491779 .

Graphic 1: Dispersion graph of gas consumption by family

 Source: Own elaboration

3.2.4 Supply Description

In recent years, gas production has increased, because the large increase in gas
demand has been a great opportunity for domestic use in the future.

Graph 1 shows the great increase of almost 150% between the years 2009 and
2010, and also with a high variation between the years 2010 and 2011. So far this year
an accelerated increase is expected with new domestic uses that use gas.

Graphic 2: Natural gas production

Source: Minem

3.2.5 Historical Supply

To obtain the supply of gas consumption per family in Peru, we must focus on
the production of gas exploitation at the national level, to have a more situated focus on
the situation we are investigating, therefore the information in synergism’s books and
annual reports, as well as from other sources. Therefore, we will take the data from
2007 to 2019 to have a wide range of information.

Table N°4: Projection of supply Natural gas production

3.2.6 Supply Projection

 For the projection of supply, we will project from 2020 to 2025, to have a better
reference to what we are focusing on.

From the data collected we obtain the following results; Y= 0.0001x+0.001 and
R²=0.6432

,a= 0.0001468 ʌ b= 0.00102054.

Graphic 3: Gas production scatter plot

Source: INEI-Own elaboration

Table N°5: Projection of supply Natural gas production

Source: Own elaboration

As a result of the projection of supply Natural gas production family for the years 2020, 2021,
2022,2023,2024,2025.

Table N°6: Projection of supply Natural gas production

Source: Own elaboration

3.3 Technical Planning .

Hydrocarbon exploration in Peru have led geologists and geophysicists to search

for oil and natural gas deposits in the region of Ancash and the most significant
discoveries have been the blocks Z-67 and Z-68, the most important task then was to
determine a dependable estimate of the oil and gas volume in those blocks and estimate
how much oil and gas can be recovered. Estimating hydrocarbon reserves require direct
and indirect methods such as the volumetric method, useful at an early stage of the
project which delivers a static measure of oil or gas in place after considering porosity,
net thickness, areal extent and hydrocarbon saturations; another method is the material
balance, useful at a late stage of the production field, this method uses some
assumptions and tries to equilibrate changes in reservoir fluid volume as a result of
production process.

It’s been estimated that block Z-67 has 35 parcels in total which sums up to
588,373.542 hectares (14 regular parcels of 20,000.000 hectares each one, 03 regular
parcels of 17,583.072 hectares each and 18 irregular parcels of diverse areas for
255,624.326 hectares all). Meanwhile block Z-68 has 600,181.068 hectares (16 regular
parcels of 20,000.000 hectares each and 21 irregular parcels of diverse area for
280,181.068 hectares all).

Exploration and production licenses are limited licenses which are granted in
licensing rounds according to the Hydrocarbons Act. Exploration and production
licenses are granted for a period of time and can be extended for longer time, which in
some countries can reach up to 30 years. The exploration license is a permission giving
to a company or a joint venture permitting them to exploration for commercially
possible deposits for the extraction of oil and gas from geographical areas at onshore or
offshore. Many countries assign petroleum exploration and development rights in
different fiscal terms; either public bids, licensing rounds, or direct negotiation, and
most of the countries use a combination of these fiscal terms. Accordingly, for award
there are different conditions: some of petroleum owners adopt quite rigid forms with
very limited biddable items that affect the sharing of the lease between stockholders and
owner of the natural resource; other owners award rights on the basis of work plans; in
others, the whole thing is negotiable.

A Field Development Plan (FDP) delivers the excellent technical solution and
roadmap for optimizing the development and production of a field. The development
Plan consist of a high number of parameters associated to the geological and physical
characteristics of the reservoir, to the operational planning and the economic scenario.
The most importance is the elaboration of methodologies that can lead to better
hydrocarbon recovery strategies and improve the profitability of the project. The studies
of the development plan provide the essential direction and information to evaluate the
project is economic or not for all possible development project scenarios, uncertainties
and risks in order to select the best optimal development model. Net present value,
actually the key element of decision-making process. Generally, determining the most
successful way to develop and produce from an oil and gas field with low risk, has
always been a challenge in petroleum industry.
 After the commerciality of the discovery has been confirmed, reservoir
simulation model will be built to estimate the initial hydrocarbon volume in the
reservoir, and to simulate the reservoir fluid flow behavior and optimize the field
development scenario (type of wells, number of producer and injector wells, and
location of wells, capacity of field production, …etc.). Appraisal wells are drilled to
improve the reservoir description through getting more data acquisition.

Normally, the production time period to extract the hydrocarbon from the
reservoir varies between 10 and 35 years and could be extended more than 40 years for
giant oil and gas fields. The reservoir lifetime is including different continuous phases:

1. A period of production increase,

2. A plateau phase
 3. Secondary phase, injection phases, including water, gas or chemicals to
enhance the hydrocarbon recovery,

4. The production depletion period when hydrocarbon production declines

with time

Once the field production flow rate is non economical, the reservoir is
abandoned. Before abandoning the field, the oil companies need to dismantle all
onshore or off-shore facilities and plug and abandoned all the wells. The total costs of
abandonment operation must be taking into account within the total cost of the
economical oil and gas field.

3.4 Costs

The use of natural gas begins with the phase of exploration, a process in which
the necessary geological studies, surveys and analyzes are carried out to discover,
identify and quantify accumulations of gaseous hydrocarbons. Once the resource is
located, a plan for the exploitation of the field is developed for the production of natural
gas, which represents the set of activities that will allow the extraction of the resource
contained in the fields and its separation from the oil, in cases where it is necessary an
associated gas field.

Natural gas fields are usually deep underground, either on land (“onshore”) or
under the sea (“offshore”). Being our case offshore because it is located off the coast of
Ancash.
It is necessary to mention that there is already an agreement with the Tullow Oil
Company for the exploration of said sector Through Supreme Decree No. 016-2020-
EM, published in the official newspaper El Peruano, the conformation, extension,
delimitation and nomenclature of the area were approved. Initial of Block Z-67, located
in the continental base off the coasts of the provinces of Santa, Casma and Huarmey
(Ancash), awarding it to PeruPetro and declaring it the subject of contract signing.

Said standard approved the license agreement between PeruPetro and Tullow
Peru Limited for the exploration and exploitation of hydrocarbons in Block Z-68, which
consists of a preliminary clause, 23 clauses and 10 annexes and which also had the
intervention of the BCR to guarantee the contractor company.

Natural gas is extracted from underground reservoirs at depths ranging from 500
m to 3,500 m.

● Natural gas once extracted from the reservoirs undergoes a separation process.
▪ Separation process
 o Through this process you get:
▪ Dry natural gas (methane and ethane) that is transported
by gas pipelines to consumption centers.
▪ Natural gas liquids (propane, butane, pentane and more)
that is transported through pipelines to a fractionation
plant.

In recent years, new so-called “unconventional” forms of natural gas extraction

have been researched and developed, especially in the US, in part due to high fuel
prices.
Gráfico de la Interrelación de variables para estimación de los costos
Fuente: Determinación de la Tarifa Única de Distribución de Gas Natural aplicables a la
Concesión de Lima y Callao para el Período 2018‐2022.

Gráfico de las Tarifas Únicas de Distribución

Fuente: OSINERGMIN

Tiempo
Costos de Mano de Obra
Año 1 Año 2 Año 3 Año 4 Año 5
1016727 1016727
Costos de Personal 10167279 10167279 10167279 9 9
Costos Extras 7854152 7854152 7854152 7854152 7854152
1802143 1802143
Total 18021431 18021431 18021431 1 1
Tabla de Costos de Mano de Obra
Fuente: Determinación de la Tarifa Única de Distribución de Gas Natural aplicables a la
Concesión de Lima y Callao para el Período 2018‐2022
 Costos de Distribución
Tiempo
Año 1 Año 2 Año 3 Año 4 Año 5
Costos Directos          
Mantenimiento preventivo 5256429 5256429 5256429 5256429 5256429
Mantenimiento correctivo 940628 1065628 1190628 1315628 2202845
Odorización del Gas 887217 887217 887217 887217 887217
Otros 693445 693470 693495 693520 693545
Supervisión Directa + GG (15%) 3504038 3504038 3504038 3504038 3504038
1165683 1254407
TOTAL 11281757 11406782 11531807 2 4
Tabla de Costos de Distribución
Fuente: Determinación de la Tarifa Única de Distribución de Gas Natural aplicables a la Concesión de
Lima y Callao para el Período 2018‐2022
Tiempo
Costos Financieros
Año 1 Año 2 Año 3 Año 4 Año 5
Costos Financieros del GN 330012 351331 370069 388116 149873
Perdidas 990404 1054383 1110618 1164779 121894
Aportes por Regulación 1570998 1994640 2019595 2141825 226405
Mantenimiento 1664881 1664881 1664881 1664881 166488
Inspección y Supervisión (Asesorías y Otros) 1663623 1663623 1663623 1663623 166362
Gastos de Promoción 233224 233224 233224 233224 23322
Total 6453142 6962082 7062010 7256448 854345
Tabla de Costos Finacieros
Fuente: Determinación de la Tarifa Única de Distribución de Gas Natural aplicables a la Concesión de
Lima y Callao para el Período 2018‐2022
Tiempo
Costos de Comercialización
Año 1 Año 2 Año 3 Año 4 Año 5
Costo Directo 7870280 7870280 7870280 7870280 7870280
Cobranza 3173064 3582513 3970527 4222581 4474635
Facturación 1464601 1646176 1824419 1972853 2121287
Supervisión Directa 2620660 2620660 2620660 2620660 2620660
Gastos Diversos 540936 562675 584248 650960 717672
Marketing 1923857 1774973 2281321 2218311 2155301
Tabla de Costos de Comercialización
Fuente: Determinación de la Tarifa Única de Distribución de Gas Natural aplicables a la Concesión de
Lima y Callao para el Período 2018‐2022

Costos de Inversión Tiempo

Año 1 Año 2 Año 3 Año Año
 4 5
408. 391.
Inversion (Millones de US%) 463.5 445.5 425.5 5 5
Esquema de presentación de los costos de inversión
Fuente: Determinación de la Tarifa Única de Distribución de Gas Natural
aplicables a la Concesión de Lima y Callao para el Período 2018‐2022

3.5 Social Assessment

In this section we will analyze the social section, contrasting the social benefits
that this project would bring and the social costs involved in its development.

▪ Social benefits

Taking into account that social benefits refer to the value represented for the
population by the use or consumption of the service provided by an investment project
in the energy sector, thus contributing to their welfare. We identify

▪ Direct benefits: immediate effect on the population.

Saving or freeing up resources: compared to other energy sources, natural gas is

the cheapest permanent energy supply on the market today; project beneficiaries could
save approximately 20% compared to the purchase of gas cylinders.

It is an uninterrupted supply, allowing gas to be available all year round, thus

reducing the logistics involved in the purchase of periodic gas cylinders according to
consumption, since with the traditional gas method there are interruptions in common
activities such as cooking.

Consumer surplus: with home delivery of natural gas service, northern users will
be able to consume more for less than they are usually willing to pay.

▪ Indirect benefits

Being a safe and diligent supply, the distribution of natural gas is beneficial,
since it is a large-scale project developed by competent entities, from extraction to
distribution through pipelines, which are periodically inspected, thus reducing accidents.
In addition, in case of leakage, natural gas dissipates quickly because it is lighter than
air. This means avoided costs due to accidents and major accidents.

▪ Positive externalities

The provision of natural gas at home derives the possibility of an increase in the
value of the homes benefited. It is also a clean energy, its use does not generate soot, it
is definitely an option to replace environmentally unfriendly energies, since gas
produces less carbon dioxide and contains no sulfur or lead, thus reducing greenhouse
gas emissions and generating less pollution.

It helps to improve the country's hydrocarbon trade balance by providing fuels

(dry gas and natural gas liquids) that allow reducing imports, since according to the
Peruvian Society of Hydrocarbons (SPH), Peru currently spends S/. 60 million per day
on importing fuel to cover domestic consumption.

Income and social benefits table

Type of project Income Social benefits

Energy and hydrocarbon Gas consumption tarif Consumer surplus: cost

distribution service of supply with
alternative sources in the
situation without PIP
minus cost of supply
 with PIP.

Table Identification of social benefits

Aim and objectives Social benefit

O: The northern population has access to Release of consumer surplus resources.

natural gas service.

FD: The population has uninterrupted gas Time savings from the purchase of gas
supply. cylinders.

FD: Project beneficiaries could save Savings or release of resources

approximately 20% compared to buying
gas cylinders.

FI: greenhouse gas emissions are Reduced expenditure on treatment of

reduced, and less pollution and disease diseases.
are generated.

FI: Decreases the incidence of accidents Avoided catastrophe losses

and fires
Base indicator for quantification

The base indicator is the Effective Demanding Population (EDP) that was
projected to estimate gas demand,

Table N° Quantification of the base indicator

Year Beneficiary

Old New Total

1 150.137 1,257,459 1,407,596

2 150.137 1,289,033 1,439,170

3 150.137 1,355,034 1,505,171

4 150.137 1,388,910 1,539,047

5 150.137 1,423,633 1,573,770

6 150.137 1,459,223 1,609,360

7 150.137 1494813 1,644,950

8 150.137 1,530,403 1,680,540

9 150.137 1,565,993 1,716,130

10 150.137 1,601,583 1,751,720

11 150.137 1,637,173 1,787,310

12 150.137 1,672,763 1,822,900

13 150.137 1,708,353 1,858,490

14 150.137 1,743,943 1,894,080

15 150.137 1,779,533 1,929,670

Table N° Unit social benefits

Project type Social benefits per unit
Natural gas distribution service Benefit according to type of subscriber
per user

PRODUCT SAVINGS (S/)

Monthly Annual
LPG Cooker 15.68 188.16
 Electric Thermos fryer 74.77 897.24
Electric Dryer 54.48 653.76
Total 144.93 1739.16

Source: Calida: simulador de ahorro

Estimation of social benefit streams, with Project
Total Old New Old New Total
Year Beneficiaries (No.) Benefits (S/.)

Total Old New Old New Total

1 1,407,596 150.137 1,257,459 261112265 2186922394 2448034659

2 1,439,170 150.137 1,289,033 261112265 2241834632 2502946897

3 1,505,171 150.137 1,355,034 261112265 2356620931 2617733196

4 1,539,047 150.137 1,388,910 261112265 2415536716 2676648981

5 1,573,770 150.137 1,423,633 261112265 2475925568 2737037833

6 1,609,360 150.137 1,459,223 261112265 2537822273 2798934538

7 1,644,950 150.137 1494813 261112265 2599718977 2860831242

8 1,680,540 150.137 1,530,403 261112265 2661615681 2922727946

9 1,716,130 150.137 1,565,993 261112265 2723512386 2984624651

10 1,751,720 150.137 1,601,583 261112265 2785409090 3046521355

11 1,787,310 150.137 1,637,173 261112265 2847305795 3108418060

12 1,822,900 150.137 1,672,763 261112265 2909202499 3170314764

13 1,858,490 150.137 1,708,353 261112265 2971099203 3232211468

14 1,894,080 150.137 1,743,943 261112265 3032995908 3294108173

15 1,929,670 150.137 1,779,533 261112265 3094892612 3356004877

Flow of social benefits (S/.)

Benefits Year 1 Years 2-9 Year 10-15
With project 2186922394 20012587164 17640905107

No project 261112265 2088898120 1566673590

Incremental 1925810129 17923689044 16074231517

Social costs
Definition of cost items,
Item Costs at market prices (S/.)
Costos de Mano de Obra 18021431

Costos Financieros 6453142

Costos de Distribución 11281757

Costos de Comercializacion 1923857

Total S/37,680,187.00

Para estimar los precios sociales se aplicará el Factor de corrección, en el caso de los
combustibles, específicamente el GNV se aplica el FC vigente que se muestra en el
Anexo SNIP 10. La fórmula es la siguiente:
Costo social del combustible = Costo de mercado x 0,649

Factor de Corrección Precio Social del combustible

Table Social cost estimation

Item Cost at market FC C Cost at social prices
prices (S/.) (S/.)

Costos de Mano de Obra 18021431 0,91 16399502.21

Costos Financieros 6453142 0,91 5872359.22

Costos de Distribución 11281757 0,649 7321860.293

Costos de 0,649
Comercialización 1923857 1248583.193

Total S/37,680,187.00 30842304.92

3.6 Sensitivity Analysis
Estimation of social profitability indicators

Flujo de Egresos
  mensual anual
S/1,501,785.9
Costos de Mano de Obra 2 18021431
Costos Financieros S/537,761.83 6453142
Costos de Distribución S/940,146.42 11281757
Costos de Comercialización S/160,321.42 1923857
S/3,140,015.5
total 8 S/37,680,187.00

Flujo de Ingresos
  mensual anual
S/
492671236
VENTAS 492,671,236.00

Ingresos Ingresos Neto

año A B A-B
S/492,671,236.0 S/454,991,049.0
1 0 S/37,680,187.00 0
S/512,378,085.4 S/470,929,879.7
2 4 S/41,448,205.70 4
S/532,084,934.8 S/488,564,318.9
3 8 S/43,520,615.99 0
S/551,791,784.3 S/506,095,137.5
4 2 S/45,696,646.78 4
S/571,498,633.7 S/523,517,154.6
5 6 S/47,981,479.12 4

VAN S/20,944,664,597.27

TIR 80%
Tasa VNA
5% S/21,112,567,431.13
10% S/20,844,124,830.99
15% S/20,626,116,094.28
20% S/20,446,883,572.16
25% S/20,297,875,563.07
30% S/20,172,724,147.29
35% S/20,066,621,817.39
40% S/19,975,892,756.01
45% S/19,897,693,254.99
50% S/19,829,799,273.50
60% S/19,718,255,264.02
80% S/19,561,310,774.21
 VNA Proyect
S/21,500,000,000.00
S/21,000,000,000.00
S/20,500,000,000.00
S/20,000,000,000.00
Series1
VNA

S/19,500,000,000.00
S/19,000,000,000.00
S/18,500,000,000.00
5% 10 15 20 25 30 35 40 45 50 60 80
% % % % % % % % % % %

tasa

3.7 Sustainability Analysis

1. Objective and Scope: 

To promote the continuous improvement of processes, oriented to integrate

sustainability into the organization, generating shared added value for Ancash.

LAP's applicable policy commits all its partners as well as its ecosystem-related
activities and AIJCh's expansion project.

Economic value generated and distributed:

1. Sustainable management:

Sustainability is defined as the way in which the Company is managed. To this

end, seven points of relevance in sustainability management were identified, which have
been guiding the following throughout this time:

● Efficiency, innovation and optimization of operations.

● Ensuring the necessary conditions for the start of the airport expansion

project.

● Generation of relations with the surrounding community and interest

groups of Lima and callao

● Confidence with the airport community.

● Environmental management

● Transparency and integrity.

● Infrastructure Management.

2. Sustainable development goals:

ESG considerations—from the impact of climate change and carbon emissions to

equality and human rights—are
creating unpriced risks in financial
markets. A global transition is now
underway to finance a more
resilient, sustainable global
economy, which may bring with it
significant growth opportunities. A
growing body of evidence also
indicates that a company’s
dedication to ESG could be an
important driver of risk
management and returns.
More and more investors around the world are taking an interest in the opportunities
and risks, and integrating ESG into their strategies.
3.8 Environmental Impact

It comes down to the strengthening of regulations, due to the history of

environmental disasters it could be said that regulations have been stricter since 2010 as
a result of the spill of oil in the Gulf of Mexico attributed to the reduction of security
regulations in the Gulf. This was the biggest oil spill in history, it left 11 workers dead
and gigantic environmental damage. Due to this disaster there were many significant
changes in the regulations around the
world, which lead to a significant
increase in transport capacity,
development of high-speed delivery
and storage, new and better pipelines
and major interconnections and
many technological advances; there
were also changes in relation to the
industry with emphasis in promoting
competition and environmental
regulations such as a gradual
reduction of pipeline operators to
just transportation, in order to make
extraction safe for the environment
and for the workers.

According to the political constitution of Perú and the law N°28611 the national
environmental policy aims to improve the quality of life of people, guaranteeing the
existence of healthy, viable ecosystems and functional in the long term, and the
sustainable development of the country through prevention, protection and recovery of
the environment and its components, it seeks the conservation and sustainable use of
natural resources in a responsible and consistent manner with respect to fundamental
human rights. It is also said that companies or entities that carry out extractive activities
that generate wastewater are responsible for their treatment in order to reduce their
contamination levels down to levels compatible with international standards established
with environmental instruments management.
 During the performance of their activities, mining, hydrocarbon and electricity
companies have environmental standards, which include the maximum permissible
limits (LMP) and national environmental quality standards (ECA). The LMP ensure that
liquid effluents or gaseous emissions emitted by companies do not exceed certain
concentration levels that are considered harmful to health, human well-being and the
environment. Its compliance is legally enforceable. Similarly, ECA apply looking for
the air, water or soil to maintain a quality that does not represent significant risk for
people's health or the environment.

Maximum Permissible Limits (LMP) (Environment Ministry, Peru)

That being said, natural gas is one of the most clean and respectful energy
sources with the environment, since it contains less carbon dioxide (CO2) and throws
minor emissions to the atmosphere. It is also an economical and efficient type of energy
because it is a safe and versatile alternative able to satisfy energy demand. On the other
hand, the use of natural gas will increase home safety by replacing liquefied petroleum
gas as it is not toxic or corrosive and in case of leakage it dissipates quickly. Natural gas
also has less deadly consequences as opposed to using solid fuels such as firewood, crop
residues and manure (responsible for the premature death of millions of people in the
world). Natural gas also doesn’t contain sulfur or lead and its usage represents a
decrease of up to 97% polluting emissions with respect to liquid fuels, which favors the
care for environment.

In the industrial sector natural gas is an economic fuel for the generation of
electricity and reduced environmental impact; it replaces advantageously other kind of
fuels such as coal or kerosene, which is ideal for ceramics, cement, and manufacture of
glass, among others. It also provides benefits to the residential sector, commercial and
transport, since it is a source of cheaper and less polluting energy and represents
significant savings compared to fuels commonly used in these sectors.

3.9 Execution Plan

a) Organization:

We are a natural gas distribution company that through a concession given by

the government, under local legislation and regulation, will provide the public
distribution service in a specific geographic area, delimited and described in a contract
in which the rights and Obligations of both parties for the provision of said service.

The company seeks in the future to expand beyond industrial clients or micro-
marketers, for which two stages had been established for the distribution of natural gas
to families in those areas in a medium to long-term stage among which they are They
stand out for being mostly low-income.

Identification of technical areas involved and professional profile

b) Implementation plan:

c) Definition of the execution method:

The nature of the project will be of direct administration because it will only be
in charge of the distribution of natural gas and the professionals hired will be in charge
of managing all the sectors explained previously.

d) Preconditions:

The preconditions to approve that the License Contracts for the Exploration and
Exploitation of Hydrocarbons, entered into between PERUPETRO and the Contractor,
must have the following characteristics:

1. - Costs and risks

During the exploration stage, the Contractor is obliged to make a minimum of

investments, complying with the Exploratory Work Units defined in each of the
contracts. Once the Commercial Discovery has been made, the Contractor will prepare
an Initial Development Plan that is approved by PERUPETRO, then must present the
following documentation:

a. "An annual work program and the detailed budget of income, costs, expenses
and investments corresponding to the following calendar year."
 b. "An annual work program and detailed budget of income, costs, expenses and
investments for Exploration, aimed at seeking additional reserves, if applicable."

c. "A work program and its projection of income, costs, expenses and
corresponding investments for Development and / or Production for the next five (5)
calendar years."

The Contractor will provide and be responsible for all the technical and financial
resources required for the execution of the Operations.

2. - Property

The hydrocarbons "in situ" are owned by the government of Peru. The property
right over the extracted Hydrocarbons is transferred by PERUPETRO to the contractor
on the Subscription Date, in accordance with the provisions of the contract and in article
8 of Law No. 26221. The Contractor undertakes to pay the State, through of
PERUPETRO, the cash royalty under the conditions and timing established in the
Contract.

On the other hand, article 39 of the Organic Law of Hydrocarbons No. 26221
establishes that the contractor will have "the free availability of the Hydrocarbons that
correspond to him according to the Contract and may export them free of all taxes,
including those that require express mention." Additionally, in "case of national
emergency declared by law, by virtue of which the State must acquire Hydrocarbons
from local producers, this will be carried out at international prices according to the
valuation and payment mechanisms that will be established in each contract."

3. - Duration

The term for the exploration stage is 7 years and for the Petroleum exploitation
stage it is the one that remains until reaching 30 years, together with the exploration
stage; On the other hand, for the exploitation of non-associated natural gas and non-
associated natural gas and condensates, it will be up to the 40-year period.

After the exploration phase, the Contractor may request the start of the
Commercial Extraction with the declaration of the Commercial Discovery, being able to
request a retention of this right when:
 a) "That the contractor can demonstrate to PERUPETRO's satisfaction that the
volumes of Hydrocarbons discovered in the Contract Area are insufficient to
economically justify the construction of the Main Pipeline".

b) “That the set of discoveries in contiguous areas plus those of the Contractor,
is insufficient to economically justify the construction of a main pipeline; and".

c) "That the contractor demonstrates, on an economic basis, that the

Hydrocarbons discovered cannot be transformed from the Contract Area to a place for
commercialization, by any means of transport."

3.10 Institutions and Administration

Being a work for something that belongs to the state from which we will obtain
the concession, the institutions that will participate will be the following:

The importance of PeruPetro in this area is more than obvious since basically all
coordination in this area is given through this autonomous entity. In addition, the
president of PeruPetro asserted that Peru's hydrocarbon potential could allow it to have
enough energy to reactivate the country's economy. Likewise, PERUPETRO S.A. It
complied with carrying out a strict process of transparency of information to the
authorities, fishermen and population of the coastal strip of Chimbote (Provinces of
Huarmey, Casma and Santa), as part of the Complementary Measures of Citizen
Participation for Lots Z-67 and Z -68, located 50 miles from the coast (90 km).
 Institutions Specification

PeruPetro It is the State Private Law Company,

which, on behalf of the Peruvian State, is
in charge of promoting, negotiating,
signing and supervising contracts for the
exploration and exploitation of
hydrocarbons in Peru.

Ministerio de Energía y Minas Its purpose is to formulate and evaluate, in

harmony with the general policy and
government plans, national policies
regarding the sustainable development of
mining - energy activities.

Ministerio de Economía y Finanzas The main functions of the Ministry of

Economy are: Planning, directing and
controlling the policies of the financial
business activity of the State as well as
harmonizing economic activity.

Sociedad nacional de minería petróleo y It promotes the efficient development of

energía mining, hydrocarbon and electrical activities.
Channel the institutional interests of its
Associates before the Public Powers.
Representing the Sectors before public and
private institutions and legal entities.

Osinergmin It is the public institution that supervises

that formal electricity and hydrocarbon
companies provide a permanent, safe
and quality service, and that mining
companies carry out their activities
safely.

3.11 Logical framework of the eventually selected option

3.12 Middle and long term Plan
3.12.1 Medium Term Plan
For our project, the medium term is projected for 8 years.
- By 2029, 20% increase in gas consumption by region compared to the start year.
- By 2029, increase the chance of getting a job in your community.
- By 2029, increase the number of gas distributors throughout Ancash.
- By 2029, increase involve the community with the project so that they have a
better quality of life.
3.12.2 Long Term Plan
For our project, the long term is projected for 15 years
- By 2036, the number of gas distributors will have increased by 80% compared
to the initial year.
- The entire population of Ancash uses gas in their kitchens
- It is expected to place a new exploitation plant in the Madre de Dios area to
continue supplying gas, without affecting the flora and fauna.
 Reference

Luis Espinoza Conexión-ESAN (2020, Octubre 21). Gas natural en Perú: perspectivas
para el sector de hidrocarburos. Recovered from:
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perspectivas-del-sector-hidrocarburos/

Virginia B., Beatriz A., José U., Oscar E., Gerardo M. (2020) Boletín Estadístico
Procesamiento, Producción y transporte de Gas Natural 3er Trimestre 2020.
Recovered from:
http://gasnatural.osinerg.gob.pe/contenidos/uploads/GFGN/Osinergmin-boletin-
estadistico-gas-natural-2020-III.pdf

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reporte-de-inflacion-setiembre-2021.pdf

Carlos A., Miranda V., Carlos R., José G., Christian K., Daphne T. (2017). La Industria
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