June 25, 2008 / 2:06 AM / 11 years ago

IADB signs $800 million loan contracts for Peru gas

LIMA, June 24 (Reuters) - The Inter-American Development Bank signed finance loans totaling $800 million for Peru’s liquefied natural gas project to export gas from the Camisea field, the Peruvian finance ministry said on Tuesday.

The total cost of LNG project located in southern Peru is around $3.8 billion. It would be the largest foreign direct investment in the history of the Andean country.

The loan is marked to help build a natural gas liquefaction plant, according to a statement from the ministry.

Some $400 million of the amount comes from a direct loan from the IADB, while the remaining $400 million was loaned by banks and other institutional investors, said a ministry spokesperson.

He added that signing the loans marked the final step of the loan approval process.

Environmental groups have opposed using gas from the Camisea field, an important reserve in South America that Peru wants to develop as part of a broader plan to gain energy self-sufficiency.

Besides the liquefaction plant, the Peru LNG project will include a marine terminal and a pipeline connecting the plant to an existing gas pipeline.

U.S. firm Hunt Oil, Spain’s Repsol-YPF (REP.MC), South Korea’s SK Energy (096770.KS) and Japan’s Marubeni (8002.T) have already invested some $800 million in the project.

The finance ministry said Peru’s LNG project, once complete, could boost annual economic growth by as much as 0.8 percent. Peru’s economy, one of the fastest-growing in the world, expanded some 9 percent last year.

The whole Camisea gas field has proven reserves of 13.4 trillion cubic feet, though analysts expect reserves to climb as companies continue exploration. (Reporting by Dana Ford; editing by Carol Bishopric)

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