Eric Watkins
Oil Diplomacy Editor

LOS ANGELES, Sept. 18 -- Peru's state-owned Perupetro SA said Emerald Energy PLC won the bid for Block 163 in the recently completed 2008 round. Block 163 is in the Ucayali basin, some 440 km northeast of Lima and comprises an area of about 5,000 sq km.

Emerald said the exploration and production contract is a tax-royalty agreement in which the royalty, including additional royalty as part of the bidding process, is 13% on the first 5,000 b/d, increasing to 28% for production levels exceeding100,000 b/d.

Emerald said the contract's 12-month Phase 1 work commitment consists of technical studies. Phase 2, if entered, would last 18 months and has a minimum work commitment of 300 km of 2D seismic acquisition and processing. Phase 3, if entered, would require at least one exploration well during the 18-month period.

Emerald said Block 163 is in an area containing gas and oil fields producing from Cretaceous formations and is traversed by pipelines to a refinery in Pucallpa, the capital of Coronel Portillo Province. Emerald said several leads have been identified at 9,000-12,000 ft depths "from the existing sparse 2D seismic data."

Subject to completion of the award process, Emerald will be operator, holding 100% interest in Block 163.