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Interview

with Barbara Bruce, President and General ManagerCountry:Peru, Hunt Oil Peru

28.04.2011 / Energyboardroom

You led Peru LNG for the last 4-5 years. This year you became the head of Hunt Oil in Peru. What were your main achievements at Peru LNG and what lessons can you now bring to Hunt Oil?

In terms of the principal achievements I would say that it has been completing three major projects in Peru not just under budget but on time. In addition, the company had a fantastic safety record for these projects: the terminal, the plant and over 400 kms of pipeline. Peru LNG therefore provided me a wealth of experience to bring to Hunt Oil.

What is the role that Peru plays for Hunt Oil world wide and how would you categorise this market?

Hunt Oil has been active internationally for many years and Peru is a now a major focus for the Company. Hunt Oil set up an international joint-venture in Yemen many years ago. It discovered and produced over one billion barrels of oil and today Hunt participates in a very successful LNG plant there with potentially 10 trillion cubic feet of gas reserves. The Yemen project began practically at the same time as the Peruvian project and today I can safely say that Peru is a major asset to the company. The Camisea project represents a change in life in Peru and Hunt Oil is very proud to be a part of this. Hunt has many projects that are large scale and important, and Peru is by any standard one of those.

2010 has been a special year for Hunt Oil’s operation in Peru with Peru LNG becoming operational. What are your expectations for 2011 and what will be the main growth drivers?

For 2011 Hunt Oil is seeking to expand our exploration activities in preparation for the first exploration well in block 76 in the provinces of Manu and Tambopata. This block has a huge potential for hydrocarbons and our expectation is that there will be at least gas and possibly some oil. In block 143 we are in the phase of acquiring more seismic data and have another 12 months to fulfil this phase. Therefore these two blocks should be the main growth drivers.

Do you have the financial capabilities to repeat the success of the Peru LNG project with this new block?

Yes – Hunt Oil has learned a lot from PERU LNG in terms of project management and finance in Peru, as well as environmental, social and cultural standards. These same modalities of operation will be applied in any future project that we develop in Peru.

Today there are some export pricing issues regarding Peru LNG. How do you view the government’s efforts to involve all the stakeholders in negotiations?

I think it is necessary to separate two things when discussing this issue. Peru LNG as a customer of Camisea producers has a gas sales agreement and its terms were clearly defined for the local and export markets. The pricing decision was well thought out and there was no stone left unturned. Today prices are high but they could come down any time, and this is the reality of the oil & gas industry anywhere, anytime. The analysis of the pricing issue must therefore include a long-term perspective that takes into consideration the fluctuation of prices in the long run.

The government has highlighted the legal stability of the country. Do you agree with this analysis and will there be changes during the time of elections?

We are very comfortable with the stability of Peru’s legal system – regardless o whatever political group is in power. PERU LNG’s long-term agreements and negotiations were intended to create stability, confidence and trust. Our operations involving the Camisea fields have already been under four different administrations: the Fujimori administration, the transition administration of Paniagua, the Toledo administration, and now the current administration with President García. None of these administrations has questioned the contracts agreed to in the past by the government. The initial negotiations clearly sufficed to give a win-win situation to all concerned and I do not believe there will be changes during or after the elections.

In a country like Peru social and environmental issues are very sensitive. How has Hunt Oil behaved towards remote rural communities and how has it established a good reputation?

Hunt Oil began communications early as we thought it necessary to communicate with stakeholders and communities ahead of time. Indeed, we addressed them two years ahead of any construction activity. Of course, this takes time, manpower and effort dedicated to just one issue: informing stakeholders about what is going to be done. We are very direct in our dealings and make no false promises creating undue expectations. Through this open and frank dialogue we can inspire trust in our activities. In fact, our social programs have already been recognized with awards in international contests for their success.

Looking towards the future, what are your main ambitions over the next 3-5 years?

Firstly, I would say that Hunt Oil takes into consideration not just the next 3-5 years but many additional years into the future. The company is partnered within the Camisea project and is pleased with its long-term relationship with Peru. Hunt Oil is doing what it believes to be good for the country in terms of generating wealth and protecting the environment. We want to be a force for positive change.
Speaking as a Peruvian, Peru is going through a fantastic time at the moment. Now is the time to bring in as many specialists and companies as possible to develop the local industry. As a prime example, if you observe the current elections, there is no talk of changing the current economic model of the country because we know that it works – and brings prosperity.

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