Petroperu IPO Revived as Humala Eyes Ecopetrol Growth

Peru is reviving plans to sell shares in its state oil company in a bid to keep pace with rising energy demand in Latin America’s fastest-growing major economy.

The government will seek congressional approval for an initial public offering as part of a plan to sell as much as 49 percent of Petroleos del Peru SA, known as Petroperu, Energy and Mines Minister Jorge Merino told reporters in Lima Dec. 6. Peru will also build a new $3.5 billion refinery, he said.

President Ollanta Humala is looking to succeed where his predecessor Alan Garcia failed in opening up the country’s biggest state company to private capital while retaining government control, a model used by Brazil and Colombia. Petroperu and its advisers will design a strategy to make the company attractive to private investors, Merino said.

“The aim is to internationalize the company, put it on a par with other competitive companies in the world, and especially Latin America,” he said. “It’s important to look at examples of other companies in the world that have been able to grow with the injection of private capital.”

The government, which had planned to sell as much as 20 percent of Petroperu on the stock exchange, also approved a plan to build a new refinery in Talara, on Peru’s northern coast, to replace a plant operating since 1917, Merino said.

Import Cuts

The new refinery will produce 95,000 barrels a day compared with the existing plant’s 65,000 barrels, reducing imports by about $1.5 billion. The refinery will produce cleaner fuel and refine oil from Peru’s northern jungle, including Paris-based Perenco SA’s Block 67, which began commercial production last week, he said.

Petroperu sold its production blocks and largest refinery in 1996 during a wave of asset sales under the government of Alberto Fujimori. The Lima-based company will take on $2.73 billion in debt to build the refinery and finance the remainder with private investment, Finance Minister Miguel Castilla said at the same Dec. 6 press conference. The government will provide a guarantee of as much as as $1 billion, he said.

Shares in Ecopetrol SA have tripled since Colombia’s state-run oil company raised about $3 billion in a 2007 initial public offering. The company is now the 12th most valuable oil producer globally at $87 billion.

Peru’s economy will expand 5.1 percent this year and 5.45 percent next year, according to the average forecast of analysts tracked by Bloomberg. That compares with Latin America’s forecast growth of 2.47 percent and 3.09 percent, respectively, the data show.

Petroperu had net income of $34.1 million in the third quarter compared with $40.4 million a year earlier and a loss of $39.1 million in the second quarter this year, according to data compiled by Bloomberg.

To contact the reporter on this story: John Quigley in Lima at

To contact the editor responsible for this story: James Attwood at

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