The story
Founded by Juan Velasco Alvarado in 1969.1
Background
On 9 October 1968, the dictatorship of General Juan Velasco Alvarado ordered the seizure and summary expropriation of the facilities of The International Petroleum Company (IPC), a subsidiary of Standard Oil of New Jersey, at the Talara refinery (Piura Department); carried out by General Fermín Málaga. This forced nationalization had a massive publicity effect, helped sway public opinion in favor of the military coup, and allowed the dictatorship to consolidate its grip on power. The date was declared by the military, as the Day of National Dignity, and celebrated as a public holiday until the end of the dictatorship in 1980.
Beginnings
Petroperú was created the following year by law decree issued by General Juan Velasco Alvarado on 24 July 1969. The newly created company was chaired by another General, Marco Fernández-Baca Carrasco and had to face the challenges of operating and maintaining the recently nationalized oil industry with local personnel. It had to do this without resources or technical support from global oil players, who had been alienated by the forced nationalization of the military government.
The company and the government nevertheless had the assistance of Soviet technicians and were able to retain middle managers, surviving and even thriving despite reduced production capacity. Extraction and refining progressively increased owing to oilfield discoveries in the northern jungle (Loreto Department), association agreements that followed after Gen Velasco's deposition by another coup in 1975, and the construction of the North Peruvian Pipeline (Oleoducto Norperuano).
21st-century developments
During 2011, Petroperú participated in the construction of the Southern Pipeline, a project that aimed at improving the economic conditions in the south of the country. It also invested about 400 million dollars in the construction of the ethane pipeline that started in the city of Pisco, the same year.
In December 2020, the state oil company, at the special request of the Executive Branch, headed by President Francisco Sagasti, assumed the concession of the Natural Gas Distribution System by Pipeline Network of the South West Concession, for up to three years. This way, Petroperú took over the administration of this temporary concession in order to guarantee the continuity of the provision of the public service of natural gas distribution through the pipeline network in the Arequipa, Moquegua and Tacna regions. This assignment was assumed with full responsibility in a key period for the state company, which commenced a modernization process that included the implementation of important activities to allow it to evolve, maintaining the leadership and sustainability of the business, with transparency, and social and environmental responsibility.
In January 2021 it officially unveiled its new identity, the result of more than eight-years' work in a process that has resulted in a renewed version of the institution's image. With this change, Petroperú sought to position itself in the Peruvian fuel market with a sustainable and competitive projection. In the same year, it received authorization from the Executive Power to issue bonds worth up to $1 billion to finance the last phase of the modernization works of the Talara Refinery.
An oil spill in 2022, at the 177-kilometre (110 mi) mark on the North Peruvian Pipeline, resulted in oil slicks and subsequent contamination of rivers, and impacting fishing and food sources for Amazonian communities. Indigenous environmental activist, Olivia Bisa Tirko, demanded that the state and Petroperú remedy the environmental damage and questioned the hiring of remediation companies due to their alleged history of non-compliance in the management of toxic waste. In the Provincial Criminal Prosecutor's Office of Datem del Marañón – San Lorenzo, Petroperú filed, in 2022, four criminal complaints against Bisa Tirko for the alleged crimes of concealment, kidnapping, and endangering public safety; that were all dismissed in March 2023. Bisa Tirko reported that she was the victim of threats, harassment, and psychological violence against her and her children, including via telephone calls and strangers visiting her home.
Modernization initiative
In December 2013, at a press conference, the then head of the Ministry of Economy and Finance, Luis Miguel Castilla, pointed out that the modernization project for the Talara Refinery is part of "a much larger initiative" to modernize Petroperú. "The approved bill, which will be sent to Congress for debate and approval, includes an administrative and business unit reorganization, which will ensure the financial reorganization and sustainability of the company's operations," he said. It also includes a very aggressive plan to "install good corporate governance practices," as the main oil companies in the world have. Also, the modernization plan includes a strategy to open the company's capital to private partners, up to 49%, and to be listed on the Stock Exchange, a target for the following months and years. "Another part of the company's share package within the 49% that will be offered on the stock market will be destined to a citizen participation program," he announced. Castilla emphasizes that the incorporation of private capital "is essential" to modernize and accelerate better management processes within the company.
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For his part, the president of Petroperu in that period, Héctor Reyes Cruz, believes that the modernization includes building a new complex to put aside the current infrastructure of the Piura refinery. "There are nine industrial plants, plus auxiliary plants, which add up to 15 new plants at the Talara refinery. The plants that are currently operating will be out of service", he mentioned. Similarly, he stressed that the project is about "the new Talara refinery", which will remove the sulfur content from fuels to make them more friendly to the health and environment of Peruvians. The new refinery will produce high-octane gasoline, will be able to process heavier crude oils and the investment made will benefit the Piura region and the entire country. "This project generates flows that by themselves pay for the project in all its context and, furthermore, it is part of the modernization of Petróleos del Perú," he points out.
Currently, Petroperú is close to completing the last phase of the Talara Refinery modernization project. For this last phase, it requires 700 million dollars, which will be obtained with the issuance of bonds worth up to 1 billion dollars. This is thanks to the fact that it received approval to issue them from the government. However, it is known that this debt issuance will not be endorsed by the Executive. Thanks to this new effort, the refinery, which is close to 93% under construction, is expected to expand its crude oil refining capacity from 65,000 to 95,000 barrels per day.
From Wikipedia’s article on Petroperú, shared under CC BY-SA 4.0.4