The oil and gas downstream market in Peru is porjected to register a CAGR of more than 1.61% during 2020 - 2025. Factors, such as increasing oil and gas production and the government's push to invest in the refineries, are expected to boost the dgrowth of the oil and gas downstream market in Peru during the forecast period. However, the country faces a lot of supply-related issues, which must be fixed for steady growth in the sector.
- The oil refining capacity is expected to witness growth due to expansion in the existing refineries and government's focus towards increasing the oil and gas infrastructure.
- Peru has approximately 12.4 trillion cubic feet (Tcf) of gas reserves, which account for 0.2% of the total share of gas reserves in the world. Large scale production may become an opportunity for downstream companies, as the refineries may be utilized to the maximum.
- The oil and gas downstream industry in Peru is expected to witness growth due to an increase in the consumption of oil and gas in the country. Increase in the investment is also expected to amplify the growth in the sector.
Key Market Trends
Oil Refining Capacity to Witness Growth
- The refining capacity in the country remained stable in the 2015-2018 period. The country lacks necessary infrastructure requirements related to the oil and gas downstream sector. Moreover, the rugged terrain in the country makes the supply chain a massive obstacle.
- In 2019, expansion in the refining capacity of the second-largest refinery in the country is expected to take place over the forecast period. Talara Refinery is expected to increase its capacity from 65,000 barrels per day to 95,000 barrels per day.
- Consumption of natural gas increased in the country, by 3.52% from 5.8 million ton of oil equivalent, in 2017 to 6.1 million ton of oil equivalent, in 2018. Production of gas in Peru increased slightly by 0.23%, year on year, from 10.9 million ton oil equivalent in 2015, to 11.0 million ton oil equivalent, in 2018. Increase in natural gas production provides boost to the petrochemical industry.
- Hence, the refining capacity is expected to increase slightly over the forecast period due to an increase in investment in the oil and gas downstream sector.
Increasing Consumption of Oil to Drive the Market
- The increase in the consumption of oil and gas in the country is expected to positively impact the growth of the oil and gas downstream industry over the forecast period. Increase in the midstream infrastructure is also expected to make the downstream sector more economically viable.
- Production of oil in the country increased, by 12.4%, from 137,000 barrels per day, in 2017 to 154,000 barrels per day, in 2018. The consumption of oil, in the country, increased, by 1.96%, year on year, from 247,000, in 2015 to 267,000, in 2018. The increase in consumption and production of oil is expected to increase the growth in the industry.
- In 2018, Peru’s new government plans to promote infrastructure projects and investments to improve the country’s productivity, including restarting of a natural gas pipeline and plans to build a petrochemical plant. The increase in gas infrastructure is expected to promote the petrochemical industry.
- The oil and gas downstream industry in Peru is expected to grow significantly in the forecast period due to an increase in oil and gas consumption and proposed new investment in the country.
The oil and gas downstream market in Peru is moderately consolidated. The major companies include Total SA, Royal Dutch Shell PLC, CF Industries Holdings, Inc., Repsol SA, and Petróleos del Perú SA.
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