Petroperu Confident on Project Funding

With the $1.7bn upgrade to the Talara refinery on the horizon, Petroperu’s president is confident the markets will be available for funds. “We believe that we will be able to raise capital regardless of the format that is chosen. Peru has a strong economy and is highly attractive to investors,” Humberto Campodonico tells LatinFinance. The official adds that the final decisions should come as soon as later in the second quarter. A portion is expected to come from the sale of as much as 20% of the company on the Bolsa. Petroperu lists on the Bolsa, which requires it to adhere to the standards of the local regulatory commission, but does not trade. Originally expected by midyear, the deal has been delayed until at least the fourth quarter, finance ministry officials have said. The government had wanted to increase the valuation of the company, seen at around $1bn. Other spending could also be in the cards for the state-owned oil producer, including participation in the construction of a $3.8 billion southern gas pipeline running from the Camisea fields 1,000km south to the port city of Ilo, built by Brazil’s Odebrecht. Campodonico says the company’s potential commitment could be close to $800m. Not all are convinced that spending should go beyond Talara. “The state should not be involved in construction of the new pipeline. It is a project initiated by the private sector and should remain wholly in the private sector,” Cecilia Blume, an energy expert and top executive in the finance ministry during the government of former President Alejandro Toledo, tells LatinFinance. Petroperu could be overextending itself at a time when it should be concentrating on Talara, she says. The Talara upgrade is aimed at reducing levels of sulfur and allowing the facility to refine the heavy crude that will be extracted in the future in northern Peru. The government wants to upgrade production to 95,000 barrels per day from 65,000. Bank loans, export-import funds, and multilateral financ