Peru government backs away from Suez gas pipeline

LIMA, May 9 (Reuters) - Peru's government said on Friday that it would prioritize the construction of a natural gas pipeline in the Andes, instead of one along its Pacific coast that is being pushed by France's Suez Energy.

Suez (LYOE.PA: Quote, Profile, Research) has told the government it would invest around $800 million building a pipeline from Peru's Camisea field.

But Kuntur Transportadora de Gas, owned by U.S. investment fund Conduit Capital Partners, wants to build a potentially more expensive one along the Andes, heading south from Camisea.

The government, analysts say, should only approve one pipeline as there isn't enough demand to support two.

And regional leaders in southern Peru are pushing the government to abide by a law that requires the pipeline to be built in the mountains.

"There is a law that says it's a public necessity to build the pipeline in the Andes, and the law is the law," Prime Minister Jorge del Castillo told reporters.

"The other project ... has been presented to the government, but obviously the government needs to give priority to the law," del Castillo said.

Peru is trying to boost consumption of natural gas to generate electricity for its vast mining sector, and develop a petrochemicals industry. (Reporting by Teresa Cespedes, Writing by Terry Wade, Editing by Marguerita Choy)