Oil & Gas Alert – August 2023

Transitional measures to guarantee the supply of natural gas are established

Ministerial Resolution Nº 316-2023-MINEM/DM, published on 4 August 2023 in the Official Gazette “El Peruano” (“Resolution”), established transitory measures to guarantee the supply of natural gas. This, within the framework of the provisions of Article 2 of Supreme Decree Nº 001-2011-EM and its amendments, which states that in all situations not related to the Hydrocarbons Registry and where a serious impact on the security of the internal supply of hydrocarbons of the whole country is foreseen or observed, the supply of hydrocarbons of a particular area or the stoppage of the supply of natural gas in a particular area or the paralysis of the supply of natural gas in a particular area is foreseen, of a particular area or the paralysis of public services or the attention of basic needs, the Ministry of Energy and Mines (“MINEM”) by means of a Ministerial Resolution may establish transitory measures that exempt compliance with some articles of the Hydrocarbons Subsector regulations.

By means of Vice-Ministerial Resolution Nº 019-2023-MINEM/VMH, dated 21 July 2023 (“Vice-Ministerial Resolution”), as amended by Vice-Ministerial Resolution Nº 020-2023-MINEM/VMH, the supply of natural gas through the production systems was declared in emergency, transport of hydrocarbons through pipelines and distribution of natural gas through pipeline network, from July 25 to August 18, 2023, in order to cover the demand for natural gas in the domestic market in the aforementioned period, due to maintenance works at the Malvinas Plant operated by Pluspetrol Perú Corporation S. A.

Given the nature of the operation of the country’s natural gas supply chain, and the detection of irregular variations in the quality parameters of the natural gas coming from Camisea (specifically, the parameters of water vapor present in the natural gas), the General Directorate of Hydrocarbons of MINEM (“DGH”) indicated that the activities of transport and distribution of natural gas by pipeline network will be affected and, with this, the supply of natural gas to the different consumers and economic activities of the country, with special emphasis on electricity generation.

In order to maintain the continuity of natural gas supply to the domestic market during the emergency declared through the Vice-Ministerial Resolution, the following transitory measures were approved through the Resolution:

• Exempt natural gas distribution concessionaires by pipeline network (“Concessionaires”) that are supplied directly or indirectly through the Camisea natural gas transport system to the coast of the country, from compliance with the provisions of paragraph d) of Article 44 of the Sole Ordered Text of the Natural Gas Distribution Regulation by Pipeline Network, approved by Supreme Decree Nº 040-2008-EM, as amended (“TUO”); which establishes the technical conditions under which Concessionaires must deliver natural gas to consumers, specifying that natural gas must be free of water in its liquid state and contain a maximum of sixty-five milligrams per cubic meter (65mg/m3(st)) of water vapor.

• Exempt the natural gas transportation concessionaire from compliance with the provisions of Article 10 of the Natural Gas Pipeline Transportation Service Regulations, approved by Supreme Decree Nº 018-2004-EM, as amended; which provides that the quality conditions of natural gas at the reception and delivery points, establishes that the natural gas at the Reception Point and at the Delivery Point must comply with the specifications set forth in NTP 111.002.2003 and in Article 44 of the TUO.

The measures listed above came into force on the day of the issuance of the Resolution and will remain in force until 18 August 2023, the date on which the emergency declared by the Vice-Ministerial Resolution ends. The DGH may annul or extend the term of the transitory measures, for which it will consider the permanence of the situation of affectation of the natural gas supply that motivates the measures.

Additionally, the Resolution provided that: (i) it will be the responsibility of the distribution and transport concessionaires to guarantee that the application of the transitory measures does not affect the safety of users and the continuity of the operation of the Distribution Systems and the Transport System; and (ii) during the validity of the transitory measures, the distribution and transport concessionaires must carry out daily measurements of the natural gas parameters to establish the corresponding actions, which must be reported to OSINERGMIN and MINEM.

For further information, please contact Jorge Pérez-Taiman (jpereztaiman@estudiorodrigo.com), Carolina Noriega (cnoriega@estudiorodrigo.com), Piero Scarafone (pscarafone@estudiorodrigo.com) and/or Talía Hormaeche (thormaeche@estudiorodrigo.com).