UPDATE 1-BPZ and Shell eye $600 mln in Peru energy projects

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By Jean Luis Arce

LIMA, July 17 (Reuters) - BPZ Energy BZP.A said on Thursday it may invest up to $600 million with Royal Dutch Shell (RDSa.L) on energy projects in Peru, as the government encourages companies to develop oil and gas fields.

Shell could invest up to $300 million in natural gas explorations, while BPZ said it could invest the same amount in petroleum projects. The deal is expected to be ratified by the government in the next three months.

"The agreement with Shell is that they contribute $300 million in investment, mostly dedicated to natural gas," BPZ Energy President Manuel Zuniga told reporters.

Shell's investment would mark a return to Peru, which it left in 1998 after failing to reach an agreement with the government to develop Camisea, a rich natural gas field in southeast Peru. The project was later awarded to a consortium led by Argentina's Pluspetrol.

Shell is also weighing whether to construct a natural gas liquefaction plant, which could be used to export gas after local needs are met, Adolfo Heeren, the head of the company in Peru, said.

Peru has proven natural gas reserves of more than 13.4 trillion cubic feet and the government wants investors to help boost oil and gas output. (Writing by Terry Wade; Editing by Christian Wiessner)