Block Z-1

completed

_x000C_BPZ Energy, Inc. (BPZ) is developing an integrated gas-to-power project in northwest Peru, near the border with Ecuador. The project is designed to produce gas from their current gas reserves offshore and generate electricity for the growing demand for electricity in northern Peru. The project involves: refurbishment of an existing platform located offshore in the Corvina field in Block Z-1 some 10 miles from shore; rehabilitation of an existing suspended well and initially the drilling of two new producing wells at the platform location; installation of a 10” diameter pipeline to transport gas from the platform to shore; construction and operation of a gas processing plant capable of processing 125 million standard cubic feet per day (MMSCFD ) and a 160 MW single cycle gas power plant with initial gas supply requirements of 40 MMSCFD. The platform upgrade program began in September 2005, with drilling starting in September 2006. Construction of the pipeline, the onshore gas processing plant and power plant is scheduled to begin in early 2007 with first power generation anticipated in October 2007. BPZ is planning in the future to supply gas from the Corvina field to third party power generators in south west Ecuador via a 40 mile pipeline to be constructed. The expansion for supplying Ecuador will also include drilling two additional producing wells.