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The Role of Natural Gas in Peru’s Energy Market

Exploring the Growing Importance of Natural Gas in Peru’s Energy Landscape

Natural gas has become an increasingly important player in Peru’s energy landscape over the past few years. As the country seeks to diversify its energy mix and reduce its dependence on imported fossil fuels, natural gas has emerged as a key resource that can help to meet growing energy demand, drive economic growth, and support the transition to a more sustainable energy future.

One of the main factors driving the growth of natural gas in Peru is the country’s abundant reserves. According to the U.S. Energy Information Administration (EIA), Peru has the eighth-largest proven natural gas reserves in the Americas, with an estimated 12.5 trillion cubic feet (Tcf) as of January 2021. The majority of these reserves are located in the Camisea gas fields in the southeastern region of the country, which have been in production since 2004.

The development of the Camisea gas fields has been a game-changer for Peru’s energy sector, providing a domestic source of natural gas that has allowed the country to reduce its reliance on imported fuels. Prior to the start of production at Camisea, Peru was a net importer of natural gas, with the majority of its supplies coming from neighboring countries such as Bolivia and Argentina. Today, however, Peru is not only self-sufficient in natural gas but has also become a net exporter, with the majority of its exports destined for markets in Asia and Europe.

In addition to its role in reducing energy imports, natural gas has also played a key role in helping to diversify Peru’s energy mix. Historically, the country has been heavily reliant on hydroelectric power, which accounts for around 60% of its total electricity generation. While hydroelectric power is a clean and renewable source of energy, it is also highly susceptible to fluctuations in water availability due to changing weather patterns and climate change. As a result, there has been a growing need to develop alternative sources of energy that can help to ensure a more stable and secure supply of electricity.

Natural gas has emerged as an ideal solution to this challenge, as it is a relatively clean-burning and abundant fuel that can be used to generate electricity in a flexible and efficient manner. Over the past decade, the share of natural gas in Peru’s electricity generation mix has grown significantly, from around 17% in 2010 to over 30% in 2020. This growth has been driven by the construction of new natural gas-fired power plants, as well as the conversion of existing oil-fired plants to run on natural gas.

The growing importance of natural gas in Peru’s energy landscape has also had a number of positive economic and social impacts. The development of the Camisea gas fields has created thousands of jobs and generated billions of dollars in revenue for the government, which has been used to fund social programs and infrastructure projects. Moreover, the increased availability of natural gas has helped to lower electricity prices for consumers and has been a key factor in driving the expansion of energy access in rural areas.

Looking ahead, it is clear that natural gas will continue to play a critical role in Peru’s energy market. The government has ambitious plans to further expand the country’s natural gas infrastructure, including the construction of new pipelines and the development of additional gas fields. At the same time, there is also growing interest in exploring the potential for renewable natural gas (RNG) and hydrogen as alternative low-carbon fuels that can help to support the country’s transition to a more sustainable energy future.

In conclusion, the role of natural gas in Peru’s energy market has grown significantly over the past few years, driven by the country’s abundant reserves, the need to diversify its energy mix, and the positive economic and social impacts associated with natural gas development. As Peru continues to invest in its natural gas infrastructure and explore new opportunities for low-carbon fuels, it is clear that natural gas will remain a key pillar of the country’s energy landscape for years to come.

Source : EnergyPortal.eu