September 26, 2018 / 9:34 PM / a year ago

Petroperu eyes 40 percent stake or more on future oil partnership

LIMA (Reuters) - Peru’s state-owned energy company Petroperu is considering taking at least a 40 percent stake in the country’s largest oil block once current operator Frontera Energy Corp’s short-term contract ends in a year, the head of Petroperu said Wednesday.

Several companies, including Algerian state oil company Sonatrach, Spanish company Cepsa and Argentina’s Pluspetrol, are interested in partnering with Petroperu on Block 192, said Petroperu President James Atkins.

Frontera, whose contract expires in September 2019, has also expressed interest in a partnership, he added.

Petroperu previously said it would keep a 25 percent stake in a joint venture on Block 192, the most it could take under a law that has since been amended to allow Petroperu full control.

“We’re no longer thinking of 25 percent. We’re thinking 40 percent and higher,” Atkins said, without specifying whether Petroperu wants a controlling stake.

“Sonatrach is interesting because it produces 1.4 million barrels of oil per day in Algeria,” Atkins added in a news conference with foreign media in Peru.

Peru is a relatively small oil producer and has struggled to spur investor interest in its reserves.

In 2015, three foreign oil companies that had signaled interest in Block 192 did not offer any bids in an auction held amid slumping oil prices. The government negotiated with Frontera to keep production going under a service contract.

Block 192 holds about 130 million barrels of proven oil reserves, and Frontera produces about 10,000 barrels of oil per day from it. But output has been disrupted repeatedly in recent years due to spills from a Petroperu-operated pipeline and protests by indigenous communities.

Peru produced about 50,000 barrels per day in April, the last month for which data was available from state energy agency Perupetro.

Atkins added that Petroperu plans to sell $600 million in bonds in New York City next year to pay for upgrades at its flagship Talara refinery.

Last year, Petroperu sold $2 billion in 30-year corporate bonds backed by the Peruvian government, and said demand had surpassed $10 billion.

Petroperu, which mainly processes and commercializes crude products, has been working on $5 billion in upgrades aimed at expanding its production capacity.

Reporting By Teresa Cespedes, Writing By Mitra Taj; Editing by David Gregorio and Bill Berkrot

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