State-owned Peruvian oil company Petroperu wants to sell 10% to 15% of its shares through a private placement offering next year to pay down its debt, the head of the company said on Tuesday.
Carlos Paredes said international banks would submit proposals for advising Petroperu on the transaction on Monday.
“I think it’s indispensable” to incorporate private partners in the company, Paredes told a news conference.
Under a 2013 law, Petroperu can privatize up to 49% of its shares. But the company has thus far declined to sell any while a $4.7 billion expansion at its Talara refinery that began in 2014 has faced repeated delays and cost overruns.
“I’m not going to do it with a traditional IPO because the value of Petroperu would be punished, because the new refinery isn’t operating,” said Paredes, who became chairman of Petroperu’s board in May.
Paredes reiterated the company was also evaluating selling units at Talara to raise some $800 million.
Petroperu has already sold $2 billion in dollar-denominated bonds and secured a $1.3 billion loan from Spanish state-backed insurer Cesce to pay for the expansion at Talara.
“Petroperu is over-indebted,” Paredes said.
Paredes added that Petroperu might stop operating its oil pipeline in the Amazon if it cannot strike a deal with local communities and other stakeholders to safeguard it.
Since 2016, more than 20,000 barrels of petroleum have spilled from the pipeline in more than a dozen attacks, while at least 5,600 barrels have leaked because of corrosion or operational failures, according to data from environmental regulator OEFA.
The spills have soured the company’s relations with indigenous communities, some of which have impeded Petroperu from carrying out maintenance or environmental remediation.
“If we don’t reach an agreement that lets us operate the pipeline safely, then we can’t operate it, because it’s irresponsible of us to operate something that does so much damage to the environment and communities,” Paredes said.
Petroperu has studied proposals for upgrading the aging pipeline that range from a $600 million investment to $1.7 billion, Paredes said.
But none would be viable unless Peru produces more oil so the pipeline can transport more than the current 10,000 barrels a day. “Unless we can raise that volume significantly, no one is going to invest in the pipeline,” Paredes said.
In the past decade, Petroperu has lost an average of $20 million a year on the pipeline, Paredes said.
Source: Reuters.com