Peru plans Petroperú share sale to raise money for refinery
Almost half of Petroperú's shares will go on the stock market
The Peruvian government has won congressional approval for a plan to sell off as much as 49% of national oil company Petroperú on the local stock market in a bid to raise funds for a $3.5 billion refinery upgrade project. The government has said that Petroperú will contribute $2.73bn of funding towards the expansion and modernisation of the Talar refinery, with the rest coming from other private companies. The government has valued Petroperú at around $1bn, but said that it expects that to rise over time.
Upgrading the Talar refinery, located in the north of the country, has long been in the cards, but finally appears to be moving forward. The country's prime minister has declared the Talara refinery upgrade and the Petroperú share sale a national priority. In the meantime, the estimated cost of the project has soared from an initial estimate of around $1.5bn.
The plan calls for expanding the plant's capacity from 65,000 barrels a day (b/d) to 95,000 b/d, allowing it to produce cleaner-burning fuels and upgrading its ability to process heavy crude.
The refinery will be able to handle the heavy oil produced from new fields scheduled to come on stream over the next few years in northern Peru, energy and mines minister Jorge Merino Tafur said. Perenco plans to be producing around 60,000 b/d from Block 56 in the Amazon by 2017. Gran Tierra, a Canadian independent, plans to be producing around 40,000 b/d from its Block 95 by 2017.
While the immediate aim of the part-privatisation is to raise funds for the refinery upgrade, the government has more ambitious long-term plans for Petroperú. "This is a major project that goes beyond the modernization of the Talara refinery. The plan is to give Petroperú corporate governance to international standards, a long-term business plan, transparency and to put it on the stock market," Merino Tafur said.
The company is focused manages three small-scale refineries aside from the Talar facility, has stakes in three oil pipelines and a number of distribution and trading assets. But the government wants Petroperú to eventually move into the country's rapidly expanding exploration and production sector. "We are preparing Petroperú we want to strengthen it and then put in the upstream," Merino Tafur said.
In part-privatising Petroperú, the Peruvian government is following in the footsteps of Brazil and Colombia, which have maintained majority control over their national energy champions but used the market to transform them into world-class companies.