Sempra quits Peru pipe, CNPC hits gas

Sempra Energy is pulling out of a USD 5-billion pipeline deal in Peru, the US utilities company said Wednesday, even as China’s CNPC announced a significant onshore gas find in the south.

The additional 111 bcm (3.9 tcf) of gas CNPC found in Block 58 raises Peru’s total proven natural gas reserves by some 27.7% and could make the 1,134-kilometre gas pipeline project even more relevant.

Earlier this month, Sempra had reportedly agreed to buy the 55% majority stake of Brazil’s engineering conglomerate Odebrecht, which was forced to withdraw from the project after being embroiled in a graft scandal earlier this year.

However, Peruvian prosecutors are currently probing a number of allegations, including of possible bribery related to the project, which Odebrecht won in 2014 after its competitor, a group led by Sempra, was disqualified in the last minute. A conviction could result in the government seizing the pipeline, Reuters reported.

“Negotiations have terminated without an agreement,” said the company’s subsidiary Sempra International in a press release. “Despite significant efforts, the Peruvian government expressed its inability to provide necessary assurances that the concession would not be cancelled due to alleged legal violations by the seller or its affiliates.”

The move is seen as a serious setback for the project and Odebrecht’s junior partners are scrambling to save it after banks financing it made the Brazilian giant’s departure a condition for disbursing some USD 4.1 billion in funds, Reuters added. Spain’s Enagas owns 25% of the pipeline, which was scheduled to be completed in 2019, and Peru’s construction group Grana y Montero owns 20%.