* Government wants to renegotiate royalties
* Most LNG exports go to countries other than Mexico
By Patricia Velez
LIMA, March 26 (Reuters) - Peru has started exporting liquefied natural gas to the Manzanillo regasificaton plant in Mexico and plans to ramp up shipments to the facility now that it has opened, the head of Peru’s state energy agency said on Monday.
Spanish oil company Repsol-YPF - in charge of Peru’s LNG facility - sent its first shipment to the plant this month. Repsol has a long-term contract with the Manzanillo plant, though it had previously sent a couple of ships to two other Mexican regasification facilities.
The export contract was signed years ago when prices were low. Since then prices have risen and the fuel now costs more on Peru’s domestic market than it does for exports.
To address this price distortion, the government of President Ollanta Humala has proposed raising the royalty it charges on LNG exports of gas from Peru’s Camisea fields.
“It will be just over 100 million cubic feet per day on average, between 100 and 150 million cubic feet a day,” Aurelio Ochoa, head of Perupetro, which is responsible for negotiating royalties on behalf of the State, said when asked about the quantity to be exported this year to Manzanillo.
Repsol-YPF will eventually export about 420 million cubic feet per day to Manzanillo once the plant is operating at full capacity.
For now, the firm will continue to send nearly 80 percent of its liquefied gas sales to other destinations, mostly in Asia, where the lack of pre-existing contracts allow the government to charge higher royalties.
These destinations, including countries like Japan and Thailand, are paying a royalty of $10 to $13 per million BTU (British Thermal Units), compared to about 0.19 cent paid by the liquefied gas that is going to Manzanillo.
Natural gas sold locally pays a royalty of around $1, according to the agency.
The Peru LNG consortium, which is led by US-based Hunt Oil and also includes South Korea’s SK Energy and Japan’s Marubeni, began exporting liquefied natural gas in 2010 from the liquefaction plant in Pampa Melchorita.
As part of the negotiations, Peru is also seeking to earmark gas from Block 88, one of the largest in the Camisea fields, for use on the domestic market as part of Humala’s campaign promises to change the country’s energy matrix.
On Sunday, Humala said the government was “one step” away from finishing negotiations over Block 88. The talks also include Argentina’s Pluspetrol, Repsol-YPF, Hunt Oil, SK, Algeria’s Sonatrach and Tecpetrol Argentina.
Talks over Block 88 will not impact exports because they are fed from another area, Block 56.
Negotiations between the Peruvian government and the consortium began in July 2010 during the administration of former president Alan Garcia. (Editing by Bob Burgdorfer)