Heavy lifting in Peru
Consolidated Supply Management (CSM) executive president Alberto de Losada explains issues encountered by companies operating in Peru’s tough business environment. The UK company provides logistics services for the oil and gas industry. It has operated in Peru since 1995 and worked for the Camisea consortium between 2001 and 2010.
For any logistics company specialising in the oil and gas industry in Peru, the jungle is a key consideration. While all logistics operators complain of the difficulty of jungle operations, some of the greatest problems stem not from environmental challenges, but from the short-term approach to operations taken by companies in Peru.
UNIFY SERVICES: In a traditional oilfield project, a wide range of different services providers might handle various aspects of field development. There could be one contractor for logistics and another for helicopter transportation and marine cargoes. This approach allows each company to concentrate on its area of expertise, bidding for projects in partnership rather than competing. In Peru, where there is a very small stream of new projects, companies are following a more short-sighted approach and bidding on whatever comes along.
Companies are not interested in forming partnerships. They instead concentrate on getting as much as possible out of whatever contract is immediately in front of them.
As a result, the market fosters many full-service contracts and companies supply logistics in addition to organising marine transportation on rivers, providing helicopter services and operating technical support services for industrial camps.
EQUIPMENT NEEDED: Running a logistics operation in the jungle requires a precise understanding of helicopter capabilities. Peru has a serious shortage of heavy-lift helicopters. To date, the majority of Peru’s helicopter fleet has consisted of Russian Mil helicopters, which have a capacity of between 3 and 4 tonnes. Using smaller helicopters requires more trips to be made carrying less cargo, leading to inefficiency and delays.
However, this situation is improving with the increasing availability of models such as the CH-47 Chinook, SH-64 Skycrane and Kamov Ka-32 helicopters.
Argentinian exploration and production company Pluspetrol is the only operator using CH-47 Chinook helicopters, the heaviest available, with a lifting capacity of around 10 tonnes of cargo. Other helicopter providers have started to import and use the Sikorsky SH-64 Skycrane, which can carry about up to 8 tonnes of cargo. RIVER NAVIGATION: Transporting cargo on jungle rivers is problematic as there are a limited number of well-equipped ports in the country. They tend to experience seasonal flooding, creating difficulties in scheduling.
The true intricacies of the situation are difficult to convey to clients that may have recently entered the country. The challenge for logistics contractors is to create open communication and trust with customers.
Only by understanding the needs of an operation in advance can contractors help to streamline processes and do more than simply react to orders. Those who are giving orders may not have experience in logistics, and contractors must convey the peculiarities of the market in order to co-operate and plan in advance.
There are plans in place to improve river infrastructure in Peru, with new port facilities under construction in Yurimaguas and Pucallpa, both located in the Loreto region, but these ports are not yet fully operational.
Companies working in the northern oilfields or southern gasfields in Peru’s Amazon have developed approaches from predicting seasonal river fluctuations and complications of carrying supplies by helicopter.
GOVERNMENT REGULATION: As with all parts of the oil and gas industry in Peru, logistics contractors spend a lot of time dealing with government regulators, which creates delays.
While logistics providers are not heavily involved in the extensive environmental permitting process that slows down exploration and production, these companies are frequently forced to wait as operators seek permits, creating uncertainty and making it difficult to plan ahead.
For all companies, dealing with the tax authorities is a time-consuming process. The National Superintendency of Tax Administration, or Sunat, can heavily scrutinise businesses. It requests documents and reviews activities to such an extent that some companies establish an office for Sunat agents while they are being reviewed.
In addition, the local logistics sector is forced to wait for months and even years as operators go through seemingly endless rounds of permitting. This creates a stalled market that results in short-term thinking and heightened competition for smaller numbers of additional projects.
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