FAQ’s

GENERAL QUESTIONS

1. Why is this investment important?

PERU LNG is the first natural gas liquefaction plant in South America. Its installation makes Peru a leader in the energy industry. It is also the largest private investment in hydrocarbons in the country, amounting to 3,800 million USD. PERU LNG’s great magnitude demonstrates that Peru is an attractive destination for large investments. PERU LNG elevates the positioning of Peru within the international community in terms of investor confidence and economic development possibilities.

2. How does PERU LNG benefit Peru?

PERU LNG is an engine for economic development and job creation. During the peak period of the construction phase, PERU LNG employed over 20,000 Peruvian workers in the installation of the gas pipeline and in the construction of the LNG plant. During the three years of the construction phase, Peruvian professionals and technicians participated in intense training programs that complemented the transfer of technology and knowledge for an unprecedented industry in the country.
During the construction phase (2006-2010), PERU LNG generated a cumulative impact of 2% on GDP growth.

3. What is PERU LNG?

PERU LNG is a Peruvian company formed by four of the leading companies in the global energy industry: Hunt Oil (United States), SK Innovation (South Korea), Shell (Netherlands) and Marubeni (Japan).

4. Where is the PERU LNG plant located?

PERU LNG liquefied natural gas plant is located at kilometer 163 of the South Pan-American Highway, south of Lima.

5. What is liquefied natural gas?

Liquefied natural gas is liquid state natural gas obtained by cooling natural gas to -163°C. It is an odorless, colorless, non-corrosive, non-toxic, environmentally friendly liquid. Cooling the gas facilitates its transportation over long distances by reducing it 600 times its volume.

6. What are the components of PERU LNG?

The operation consists of three components: a 408 kilometer gas pipeline, a cryogenic processing plant with two storage tanks, and a maritime terminal.

7. How long did the construction of PERU LNG take?

The PERU LNG project, consisting of a gas processing plant, a gas transportation pipeline and a port terminal, was built under diverse construction contracts, among which the most important were engineering, supply and construction (ESC) contracts with the companies of Chicago Bridge & Iron (CB&I) group for the plant, Techint S.A.C for the pipeline, and CDB Consortium, integrated by Odebrecht, Saipem and Jan de Nul companies, for the port terminal. Construction activities took approximately 4 years, from 2006 until the plant's inauguration on June 10, 2010.

8. Which companies built the plant?

Among the main contractors during the construction phase were CB&I, responsible for the construction of the plant; CDB, responsible for the construction of the maritime terminal; and Techint, which installed the gas pipeline. In addition, dozens of Peruvian subcontractors participated in the construction, such as Graña y Montero, Cosapi, Translei, Minera San Martin, Cosmos, Aceros Arequipa, Técnicas Metálicas, Esmetal and Sima, among others.

9. When was the first shipment made?

The first shipment was made on June 22, 2010.

10. Who determines the destination of gas cargoes?

The LNG cargoes destination is determined by Shell International Trading Middle East (SITME) company.

TECHNICAL QUESTIONS

1. What type of gas does PERU LNG use?

Natural gas, which is transported to the plant for liquefaction.

2. What is natural gas?

Natural gas is a clean fuel composed basically of methane and ethane. It has become one of the most demanded energy sources in conjunction with hydropower. Natural gas is the cleanest fossil fuel that exists. It produces less emissions and pollutants than coal or petroleum.

3. How is liquefied natural gas produced?

Liquefied natural gas is obtained by purifying natural gas and cooling it to a temperature of -163°C. Through this cooling process, the natural gas is transformed into liquid, which reduces its volume by 600 times.

4. Why convert natural gas to LNG?

Natural gas can be transported through pipelines from the production area to consumers at relatively close distances. However, installing and maintaining a natural gas pipeline over long distances is not economically efficient. If we reduce the volume of natural gas by turning it into liquid, it can be transported over long distances in LNG tanker ships or trucks.

5. What happens if a leak of LNG occurs?

In case of a leak, LNG upon contact with water at room temperature forms a very thin layer of ice on the surface until the LNG raises its temperature and evaporates. LNG does not mix or sink in water. Additionally, it does not remain too long in a liquid state on the surface as to cover living species or objects. No cleaning operation is required because the rapid evaporation of LNG leaves no residue.
It is unlikely that an accidental release of LNG generates a fire, as LNG evaporates almost instantly and, since it is lighter than air, it is rapidly dispersed.

QUESTIONS ABOUT CONSTRUCTION AND INDUSTRIAL SAFETY

1. What is the size of PERU LNG plant?

The total plot area is of 521 hectares (5.21 km²). The plant occupies 50 hectares.

2. What are the characteristics of the pipeline installed by PERU LNG?

PERU LNG installed a 34” diameter gas pipeline with an extension of 408 km, from the point of interconnection with the existing TGP gas pipeline in Chiquintirca, San Miguel de la Mar, Ayacucho to the LNG plant. The installation of PERU LNG gas pipeline began in 2007 and concluded in early 2010.
The gas pipeline appears in the Guinness Book of Records as the world's highest gas pipeline, at an altitude of 4,901 meters above sea level.

3. What are the characteristics of PERU LNG’s maritime terminal?

The maritime terminal consists of a 1.3 km pier, a berth for cargo ships, a 300-meter-wide dredged navigation channel, and an 800-meter-long breakwater to allow the safe shipment of LNG in tanker ships.

4. How many jobs did PERU LNG generate during the construction phase?

During the construction phase, approximately 20,000 direct and indirect jobs were created. In 2009 alone, during the peak of the construction phase, PERU LNG employed 10,675 workers, 90% of which were Peruvians.
All the unskilled labor required during the construction phase was contracted in the communities and localities in the areas of direct influence. Over 5,600 workers were contracted in Chincha and Cañete, and more than 4,000 in the communities located along the route of the gas pipeline.
It is important to note that more than 50% of the Peruvian labor force employed during the construction phase consisted of skilled workers. This project has been made possible thanks to the work of the Peruvian workers.

5. What contributions has PERU LNG done regarding the transfer of knowledge?

For the plant operation, PERU LNG trained in alliance with TECSUP, the first group of LNG plant operators in South America, consisting of 48 Peruvian workers who obtained international certification in 2009.

6. How is the safety of operations maximized?

The project was designed and built according to the highest standards of the LNG industry worldwide.
Processes and equipment are monitored for a safe, efficient operation and an environmentally acceptable noise level. PERU LNG has training programs and security measures which are fully met. There are preventive and corrective procedures, and a permanent communication between operators, workers and local communities.
There are contingency plans to minimize the possible occurrence of incidents and to ensure a timely and effective response. These plans also ensure that related incidents and risks are properly communicated to communities, government organizations and to all those responding to an emergency.

7. What happens if there is a leak in a natural gas pipeline?

Natural gas is lighter than air. In the hypothetical case of a leak, the natural gas would dissipate rapidly under normal weather conditions. There are no risks related to skin contact, absorption through the skin, contact with the eyes or ingestion.

QUESTIONS ABOUT SOCIAL RESPONSIBILITY

1. What social investment programs are developed by PERU LNG in the communities?

PERU LNG develops a series of social and environmental investment initiatives to fulfill its commitment of improving the well-being of communities in the areas of direct influence and to sustainably benefit local populations. These programs are developed based on the needs of the communities, the same that are identified through participatory processes with the support of the population. Its purpose is to contribute to the improvement of the productive capacity of farmers and ranchers, the training of fishermen, the strengthening of local management skills, the improving of health and education conditions, and the promoting of the care and conservation of the environmental and natural resources.

2. How do community members express their concerns or request information about the operations?

Constant meetings are held with authorities, organizations, institutions and representatives of the population in order to report the activities of the company. Local media are also used, such as radio stations and/or the press. Community members and the general public communicate with the company through telephone calls, website or by visiting the offices of PERU LNG in Lima, Cañete, Chincha or Huamanga.

QUESTIONS ABOUT ENVIRONMENTAL AND CULTURAL HERITAGE ISSUES

1. Does PERU LNG have an approved Environmental and Social Impact Assessment (ESIA)? What is it for?

PERU LNG has four Environmental and Social Impact Studies (ESIS) that were approved in 2006. These studies were carried out before any construction activity, in order to identify, prevent and interpret the possible social and environmental impacts that the project would have. The ESIS were presented in public hearings and were commented on by the population and their representatives. All information on the Environmental and Social Impact Studies can be found on PERU LNG’s website: www.perulng.com

2. What environmental conservation programs does PERU LNG apply?

PERU LNG not only meets high national and international environmental standards, such as the performance standards on social and environmental sustainability of the IFC (financial arm of the World Bank) and the environmental policy of the IDB, but also implements a series of additional environmental conservation programs. An exemplary program is the Biodiversity Monitoring Plan (BMAP), which consists of a series of specific plans and programs for each place and each species, intended to protect the natural resources that are located near the pipeline, plant and maritime terminal.

3. What has PERU LNG done to protect the archaeological sites during the construction?

PERU LNG has carried out a series of works prior to the construction, in order to identify and avoid archaeological sites along the area comprising the plant and the gas pipeline. All findings were saved for further scientific investigation. In the case of those sites found by archaeological monitors during construction, the work was stopped until the rescue excavations were completed. All the work was performed under the supervision of the National Institute of Culture (now Ministry of Culture), the Peruvian government entity in charge, and the recovered pieces and information were delivered to that institution.

4. How has the archaeological work of PERU LNG benefited the population?

PERU LNG and the National Institute of Culture (INC, in Spanish) worked together to develop detailed studies and publications about the preserved materials. Also, exhibitions of the findings were organized in museums of Lima and Ayacucho to contribute to the knowledge of the national culture.

QUESTIONS ABOUT FINANCING

1. How was the project funded?

PERU LNG was funded with 2,250 million USD granted by international entities and private Peruvian institutions. The international funding came from the Inter-American Development Bank (IDB), World Bank's International Finance Corporation (IFC), Export-Import Bank of the United States, Export-Import Bank of Korea, Italian Export Credit Agency (SACE), Société Générale, BBVA, Calyon, Sumimoto, ING, Mizuho and the Tokyo-Mitsubishi Bank. The successful placement of 200 million USD in bonds in the local market was added to this. In addition, shareholders made a capital contribution of 1,600 million USD. These institutions, in addition to providing financial support, also permanently audit the social and environmental performance of PERU LNG.

2. What is the total investment cost of PERU LNG?

The total investment required to develop the entire project was approximately 3,800 million USD.

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