As part of its international expansion programme, with
a special emphasis on Latin America, Repsol has purchased 60% of Solgas,
Compa��a Peruana de Gas S.A., thus further increasing its presence in Peru,
following the purchase of the La Pampilla refinery last June.
Solgas is
top operator on the Peruvian liquid petroleum gas (LPG) - butane and propane -
market, with a 40% market share, and through this operation, together with the
recent acquisition of Rimac (a bottling and distribution company), Repsol will
now control 42% of the market there.
The LPG market in Peru has grown
over the past five years at high rates as a consequence of the country's
economic development. Demand is concentrated in geographical regions. In fact,
85% of national consumption is centred around Lima-Callao, and the residential
sector accounts for 70% of overall demand. Forecasts indicate that this
expansion will continue in the near future, linked with the country's good
economic prospects and the future exploitation of the Camisea gas fields, which
cover a large extension and are expected to produce some 1,500,000 tonnes per
year of LPG.
By acquiring 60% of Solgas, Repsol takes control of the
company. The remaining 40% belongs to the Day, Ortuzar and Gruenberg Group, and
the Chilean group Lipigas. The company's main assets are the Talara and Callao
bottling plants, and other smaller facilities at Arequipa, Chiclayo, Piura and
Trujillo. Solgas also possesses a logistics company, Energas, S.A, and recently
built a new in-coming product terminal at Ventanilla. The cost of this
transaction is $39 million.
As one of the world's top LPG distribution
companies, Repsol will apply its technological know-how and business experience
to Peru, taking part in a new market configuration by developing new lines of
business, such as piped and automotive gas, as well as new distribution
channels.
Repsol has been active in Peru since privatisation of the oil
sector began in 1993. Last year it signed an exploration contract with the
Peruvian state-owned company, Perupetro, to explore the Trujillo block on the
continental shelf off the coast of Peru. Last June, a consortium led by Repsol
won a tender on 60% of the La Pampilla refinery, where it is now technical
operator. La Pampilla has a capacity of 102,000 barrels per day, and is of great
strategic importance because of its location near the city of Lima (where 50% of
the country's overall demand is concentrated); its size, and its production
structure.
In the marketing area, Repsol already has a network of 30
sales outlets, and intends to extend this to obtain an approximately 15% market
share within the next few years. As far as LPG is concerned, Repsol entered this
sector in Peru by purchasing RIMAC, a bottling and distribution
company.
In buying Solgas, Repsol has reinforced its presence in Peru and
strengthened its activity as an integrated company, involved in exploration,
refining, marketing and gas. There is an ambitious investment programme for Peru
over the next five years. Together with other shareholders, $117 million will be
spent on improving production structure at the La Pampilla refinery, and Repsol
will also invest over $200 million on marketing and LPG.
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