Peru's government plans to sell up to 49 percent of state-owned oil Petroleos del Peru SA (Petroperu) to investors in a bid to secure private sector funding. At the same time part of the company, at least five percent, must be floated on the Lima Stock Exchange, though no date has been set for the IPO.
The administration of President Ollanta Moisés Humala Tasso has also approved a $3.5 billion upgrade to Petroperu's outdated Talara refinery on Peru’s northern coast, with the objective of cutting fuel imports and meeting stricter environmental standards. The new facility will produce cleaner fuel and refine oil at a lower cost than the town’s existing refinery, which will be scrapped. The move is part of a plan to modernise Petroperu and make it more like Mexico's Pemex, Brazil's Petrobras or Colombia's Ecopetrol.
The new law was fast-tracked through the legislature, as selling a stake in Petroperu is seen as being strategically critical to the government’s objective of ramping up oil and gas production. This will be the first injection of private capital into the company since its creation some four decades ago.
Finance Minister and Petroperu director Luis Miguel Castilla, a director of Petroperu said in a broadcast interview: "The idea is to modernise the company, and part of this process is to carry out the refinery project. Arriving at 49 percent of private capital isn't an easy objective as it will mean there will have to be a restructuring of the company. It will take time."
The company now needs to raise the money for the Talara upgrade: Petroperu plans to contribute $2.7 billion but the remaining $800 million will have to be found. After the upgrade the refinery will have the capacity to process 95,000 barrels per day of crude, compared with its current capacity of 65,000 bpd. The target date for completing the project is 2017.
