U.S.-based Valero Energy Corp. announced May 14 that, through subsidiaries, it acquired Pure Biofuels del Perú SAC from Pegasus Capital Advisors LP for an undisclosed amount in order to serve a growing Latin American petroleum market it sees as underserved by local refining capacity.
Through the cash transaction, which closed May 14, Valero acquired Peru's third-largest petroleum products importer, which counts retailers, miners and airlines among its customers.
"Peru is one of the fastest growing economies in Latin America and is well situated geographically to support our strategic growth plans," Valero Chairman, President and CEO Joe Gorder said.
During an April 26 first-quarter earnings call, Valero executives said Latin American refineries were incapable of keeping up with growing local demand following years of underinvestment.
"We're confident that demand growth in the region outpaces any kind of a reasonable ramp-up in refinery utilization," Gary Simmons, Valero's senior vice president of supply, international operations and systems optimization, said during the call.
"All of Latin America has some … exposure to … a lack of maintenance capital," Valero Executive Vice President and COO Lane Riggs said. "Over time, their operations and their reliability have eroded. Largely because of the flat price in crude [oil], they can't fund their operations. … It takes a long time to recover. … Some conversations that we've had with … counterparties in the past was, 'It's at least two turnaround cycles.'"
The deal includes refined products terminals in Callao, near Lima, Peru, and in Paita, near Piura, in northern Peru.
The Callao terminal includes mooring and unloading systems capable of serving Panamax vessels, approximately 1 million barrels of storage capacity, an eight-bay truck rack and adjacent land to support future expansion of the terminal's storage capacity.
The Paita terminal, scheduled to begin operations in mid-2018, is also Panamax-capable, will have an initial product storage capacity of 180,000 barrels and also includes land for future expansion.