Global Processing

BPZ Resources, Shell end Peru development talks

January 13, 2009
Oil and gas exploration and production company BPZ Resources Inc. has ended talks with Royal Dutch Shell PLC about jointly developing properties in northwest Peru, and signed a seven-year, $1.3 billion crude oil sales contract with PetroPeru, according to the Associated Press. Zuniga said a joint venture deal drawn up during current oil price volatility would financially burden BPZ. With crude prices tumbling sharply from summertime highs near $150 a barrel, many oil companies have pulled back on project spending. Houston-based BPZ said it will continue appraising its Corvina field, while preparing to drill in its Albacora location, and will continue developing its gas-to-power project. The PetroPeru deal covers the sale of 17 million barrels of oil at an average price of about $65 each. BPZ noted that commodity price fluctuations and production levels will determine the actual number of barrels sold and the corresponding term of the PetroPeru contract. Under this agreement, oil will be delivered from the company''s Corvina field in northwest Peru to the State-owned Talara refinery.