Petroleos del Peru SA, Peru's state oil company and the country's largest, plans to sell a 10% stake on the Lima Stock Exchange next year to raise funds for investment projects, Chief Executive Officer Cesar Gutierrez revealed on Thursday.
The proceeds from the share offering would help finance a billion US dollars expansion of its 62,000-barrel-a-day oil refinery as well as an 800 million US dollars upgrade of its 200,000 barrel-a-day oil pipeline, Gutierrez said in an interview. Petroperu seeks to follow other state oil companies such as Brazil's Petrobras and Colombia's Ecopetrol SA by selling stock to the public. The Lima-based company is also aiming to reduce the country's dependence on fuel imports by adding production to refining and trading operations. "Our goal is to list shares on the Lima Exchange in 2008", Gutierrez said. "We'll go to the local market first, as there's demand from investors such as pension funds. Then we'll think about international markets". However Gutierrez was quick to point out that selling stock "does not mean the beginning a limitless privatization process. We're talking of 10%, but the bill allows us to sell 20%". Petrobras first sold shares last decade and in 2005 made Brazil a net oil exporter for the first time. Bogota-based Ecopetrol raised 2.7 billion US dollars when it sold a 20% stake in September, Latin America's second-largest offering this year. Petroperu, which hasn't calculated how much it could raise from its IPO, accelerated financing plans after Ecopetrol's stake sale, Gutierrez said. Since Peruvian president Alan Garcia took office in July 2006, Petroperu's strategy has been to build a strong government owned oil corporation with a limited privatization in the context of soaring oil prices. In the lat eighteen months Petroperu has signed strategic alliances with Petrobras and Ecopetrol and announced joint investment plans with Venezuela's PDVSA. Proceeds from Petroperu's offering could therefore help finance oil and gas exploration in the northern Amazon jungle with Petrobras and Ecopetrol, in a bid to return to producing crude oil and natural gas for the first time in more than a decade. The company sold its production blocks, oil tanker fleet and largest oil refinery in 1996 as part of a government drive to shed state assets and attract more private investment. Petroperu's plans go against the trend in a region where the governments of Venezuela, Ecuador and Bolivia have seized oilfields and refineries from private operators such as Exxon Mobil Corp. and ConocoPhillips over the past two years.