Peru agrees to second emergency bailout for state oil company Petroperu

A day after the board of directors resigned en masse from bankrupt state oil company Petroperu, the Peruvian government said it will provide the firm with a second financial bailout.

“We’re taking extraordinary and exceptional economic measures so that Petroperu can overcome its financial situation,” cabinet chief Gustavo Adrianzen said at a press conference at the Presidential Palace in Lima late Sept. 11. “We have a duty to guarantee nationwide hydrocarbons supply and the company’s sustainability.”

Petroperu CEO Oliver Stark, the company’s third this year, quit Sept. 10, citing government inaction and calling the situation “unviable.”

Petroperu, which completed a $5.3 billion expansion of its 95,000 b/d Talara oil refinery last year, is undergoing restructuring after posting an eighth straight quarterly loss.

Refinery operations have been hampered this year by first a power failure and then a steam generator outage which damaged its flexicoking unit, spurring plans for a bid round for a project management office (PMO) to operate the refinery,

Petroperu, whose debts outweigh its assets, is merging corporate departments and has begun offering severance packages to workers in a bid to slash its bloated payroll, Energy & Mines Minister Romulo Mucho said at the same press conference. The firm aims to cut costs by 10% this year and by 30% in 2025, he said.

Petroperu, which operates four refineries with total capacity for 123,000 b/d, had expected to increase fuel sales to 108,700 b/d this year from an average of 95,000 b/d in 2023, according to a company presentation. The company has faced a series of setbacks including a fire at Talara in September 2023 and repeated attacks on its 200,000 b/d North Peruvian Oil Pipeline (ONP) this year.

Petroperu, which competes in Peru with Repsol’s 117,000 b/d La Pampilla refinery, saw the sale of crude by-products fall 4.4% to 93,700 b/d in the second quarter, according to an earnings statement. Domestic fuel sales dropped 5.7% to 65,700 b/d, while exports rose 21.7% to 28,000 b/d, The company increased crude purchases by 14% from a year ago to 53,600 b/d from 47,100 b/d, while slashing refined gasoline purchases by 63% to 19,000 b/d.