Petroperu to focus on Talara refinery upgrade after backing off Repsol bid


LIMA, Peru -- Peru's government plans to focus on modernizing its Talara refinery and other projects, after closing the door to a possible purchase of assets owned by Spanish oil company Repsol.

Withering criticisms from the business sector led the government on Thursday to announce that state-owned Petroleos del Peru, or Petroperu, won't buy Repsol's La Pampilla refinery and a chain of service stations in Peru.

Petroperu was looking at taking a minority stake in the Repsol assets, although business groups fiercely opposed any deal, saying the government would be taking too great a role in the economy.

"The decision was taken to not advance in this area as it wasn't an area that would generate economic possibility for the nation," Prime Minister Juan Jimenez told reporters.

Energy and Mines Minister Jorge Merino said the government will focus instead on projects currently under way, such as the upgrade at its Talara refinery aimed at boosting production to 95,000 bpd from about 60,000 bpd now.

Analysts said that investors will now keep a closer eye on President Ollanta Humala's policies.

"We think investors' scrutiny over President Humala's policy decisions will be on the rise," Credit Suisse said Friday in a research note.

Before being elected in 2011, Mr. Humala espoused socialist policies, but his administration has for the most part followed market-friendly policies.

Eurasia Group said that the decision was "a positive signal that President Ollanta Humala is sensitive to swings in investor confidence and remains committed to the current investor-friendly economic policy framework."

"The episode probably shows that Mr. Humala still believes in the merit of greater state presence in the hydrocarbons sector, but the risk of more aggressive policies will be contained by Mr. Humala's attempt to do so through market mechanisms and his concern over negative investor sentiment," it added.

Petroperu owns refineries, a pipeline and leases its name for a chain of service stations.

Dow Jones Newswires

Related News

From the Archive