Peru Advances Virtual Natural Gas Distribution to Cusco While Major Pipeline Projects Stall

Iris Cárdenas Pino, Peru’s Vice Minister of Hydrocarbons, addressed lawmakers at the first decentralized session of the Congressional Energy and Mining Commission held at the National University of San Antonio Abad in Cusco. She emphasized the government’s commitment to bringing cleaner, more affordable energy to regions currently without pipeline access. Cárdenas acknowledged that traditional pipeline construction would require seven to eight years, positioning virtual distribution as the practical near-term solution.

The ministry highlighted a pilot project in San Jerónimo district within Cusco, financed by the Social Energy Inclusion Fund. This initiative transports liquefied natural gas via tanker trucks from the Peru LNG plant at Pampa Melchorita in Ica, then distributes it through local networks to residential users. The project demonstrates the technical viability of virtual supply chains where permanent infrastructure remains unavailable.

Cárdenas outlined the Seven Regions project under executive evaluation, designed to equalize natural gas tariffs between Lima and other zones by cross-subsidizing costs through Lima’s demand volume. This pricing mechanism aims to address affordability barriers that have historically limited gas adoption outside the capital region.

The Southern Peruvian Gas Pipeline project achieved only eleven percent physical completion before termination, with the state receiving assets as possessor rather than owner pending arbitration resolution. This legal status prevents the government from repurposing those materials for other infrastructure needs.

The Sistema Integrado de Transporte de Gas (SITGAS) project proposes carrying natural gas to Cusco, Apurímac, Puno, Arequipa, Moquegua and Tacna with an estimated investment requirement of 4.32 billion dollars. ProInversión declared tenders for the second-stage engineering studies deserted in both 2023 and 2024 due to lack of bidders, stalling technical advancement.

Regarding Cálidda’s proposed amendment to its Lima-Callao distribution concession, the expansion would incorporate fifteen localities across Apurímac, Ayacucho, Cusco, Huancavelica, Junín, Puno and Ucayali. The proposal contemplates connecting 201,411 users with an investment of 550 million dollars. ProInversión indicated that final decisions on SITGAS cannot proceed until the government resolves whether Transportadora de Gas del Perú’s coastal pipeline proposal will fulfill overlapping objectives, creating regulatory paralysis on southern gas infrastructure development.