This non-binding memorandum of understanding (MoU) allows both parties to move forward with their negotiations on a possible farm-out agreement with the ultimate goal of jointly developing Blocks Z-1, XIX and XXIII in northwest Peru into large-scale oil and gas ventures, including regional power generation, gas supply for local and regional industry, and liquefied natural gas (LNG).

The intent of forming a joint venture is to complement BPZ Energy’s assets, local knowledge and experience, stakeholder relationships, and vision with Shell’s technology, equipment, manpower and leadership, especially in gas marketing.

Furthermore, the parties confirm that they have agreed that under no circumstance will an agreement be finalized for the acquisition of BPZ Energy’s rights in the three blocks until all necessary management and government approvals have been obtained and fully termed agreements have been executed by both parties or their respective affiliated companies, as the case may be.

Manolo Zuniga, president and CEO of BPZ Energy, said: With Shell as partner, we would have a company with the key elements needed to fully develop our assets: deep water expertise to develop the prospects in Block Z-1 that are in water depths from 500 to 1,000 feet; the ability to market and monetize the gas potential in our Blocks through large-scale projects such as LNG; and the access to people and equipment that will help us appraise the gas and oil potential more quickly.