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Tuesday, November 9, 2010

Million dollar loss or fraud of the century


The Peru will receive only U.S. $ 1.135 million for the "sale" of the 4.2 TCF of gas from Camisea to Mexico to less than 1 dollar, but if it were sold at international prices could raise between $ 15 and 23 billion.

A door to the initiation of willful Camisea gas exports by Peru LNG consortium, protests against the sale of natural gas have increased across the country, just last week, different regions of the south held a regional strike demanding that the gas remain in the country. In addition, different specialists, from months ago, have been warning of bad business that represents the export project for the country.

Leaving aside the irregularities and lobbies that made officials of the former government and now Toledo García scheme to amend the legislation and thus facilitating the Camisea gas export, the statistics again show the bad deal that is sell for Peru gas at bargain prices and arranged to evade tax millionaires without justification, and have been going on unnoticed in the midst of debate about the actual gas reserves.

When officially launch the export of gas from Block 56 of the Camisea field, the Peruvian government royalty levied 16 cents per million BTU (or thousand cubic feet of gas MPC) at the wellhead, this fund should to which Peru LNG-association that buys gas from the Camisea gas-sold to 0.53 cents.

In addition to royalties Peru LNG must pay income tax (IR), or 30% of the profits obtained by the company deducted the royalties (from U.S. $ 0.53 per MPC is deducted from the $ 0.16 paid for royalties, the amount that leaves the remaining 30% is deducted by IR. In simple words, for every $ 0.53 per MPC Peru LNG gas export must pay the state $ 0.27 per CPM ($ 0.16 for royalties and $ 0.11 for IR).

The project exporter has committed to export to Mexico 4.2 TCF (trillion cubic feet for its acronym in English) in the 18-year duration of the contract. Peru LNG If the state pays $ 0.27 for each gas MPC, then the 4.2 TCF Peru, to raise U.S. $ 1.135 billion, estimates the former Minister of Energy and Mines, Carlos Herrera Descalzi. And adds, that the Treasury and the regions will lose billions of dollars by selling the gas price so strange, is several times lower than the international price.

What is left to raise
Earlier this month the government of Bolivia has sold gas to Brazil and Argentina charging $ 6.70 and U.S. $ 7.37 for each gas MPC, respectively. Unlike Peru this sale was direct, without intermediaries, as it is known as Peru LNG sells the national gas to Mexico.

If Peru insists both sell gas abroad, you should not do so without ensuring that domestic demand is covered, unless it is to the international price, "says Desch.

Let's see how Peru fails to collect the gas by not selling to the international price. If committed to the 4.2 TCF exports to Mexico were sold to Brazil at $ 6.70 per MPC gas (the price at which it purchases gas from Bolivia now), this would mean that the State would receive in total $ 15 billion 758 million in royalties and taxes in lieu of the $ 1.135 million will receive the "sale" of gas to Mexico. Ie, Peru lost U.S. $ 14.623 billion, money that would build schools, hospitals or raise the minimum wage frozen for years, or invest in development, says the former minister.

To sell gas at $ 6.70 per MPC of the state collects gas U.S. $ 3.78 for each MPC (U.S. $ 2.54 in royalties and $ 1.24 per Income Tax). According to the Law of Stock if the selling price of gas is over five dollars for each MPO must pay royalties to the State enterprise shall be 38% of the price that is offered, and if the price is below five dollars for each gas MPC will pay royalties to 30%. So higher prices increases revenue for the treasury of Peru.

Let us see how the state fails to collect for selling the gas at bargain prices. If the 4.2 TCF of gas will be exported were sold to Argentina to U.S. $ 7.37 for each MPC (the price at which purchases gas from Bolivia now), this cost the depleted national treasury would receive U.S. $ 17 334 million and not U.S. $ 1.135 billion Peru LNG will pay the state. With this price the leaves Peru to receive U.S. $ 16 199 million.

By selling the gas to U.S. $ 7.37 by the state gas MPC raises U.S. $ 4.17 for each MPC (U.S. $ 2.80 in royalties and $ 1.37 per Income Tax).

Now, if you were selling the 4.2 TCF of Chile-which is likely to happen by the company that is part of the Camisea Consortium, Repsol, the price the neighboring country pays Trinidad: U.S. $ 10 per MPC, Peru, receive U.S. $ 23, 052 million and not the $ 1.135 million project that will leave the unfortunate exporter. Here the Treasury stops receiving $ 21, 917 million.

By selling the gas from Camisea to $ 10 for the state gas MPC raises U.S. $ 5.66 for each MPC (U.S. $ 3.80 in royalties and U.S. $ 1.86 Income Tax).

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