How Petroperú looks to trim losses after 2022 plunge

Peru’s national oil company Petroperú projects a net loss of US$174mn this year compared to a net loss of US$278mn in 2022 and a net profit of US$68mn a year earlier.

In its latest financials, the NOC highlights that management has implemented an economic, financial, and operational sustainability plan to address governance and transparency shortfalls.

To advance on this front, Petroperú recently inked a contract with Arthur D. Little in a consortium with Columbus HB Latam to prepare a restructuring plan which must be presented to the board by July 31.

This year’s bottom line forecast is based on optimized production of greater value-added fuel from the new Talara refinery, a gradual recovery of market share from the start-up of Talara, and prioritization of operating expenses.

Petroperú said that in 2022 its domestic fuel sales slid nearly 11% to 82,000b/d and that its market share fell to 31% from 36%.

The drops were attributed to the “lack of availability of inventories given the liquidity problems that the company faced from March to October 2022, continuous port closures, social mobilizations that caused problems in the supply of fuel in the country, as well as less advantageous commercial conditions compared to that offered by the competition.”

The company pointed to a net loss of US$84mn last year from suspended operations of the Norperuano oil pipeline on account of social conflict, and that US$34mn was spent to address environmental contingencies due to cuts along the duct which Petroperú attributed to third parties.

Petroperú adds that the US$174mn loss will come from depreciation costs and financial expenses for interest on long-term financing of the new refinery, and exchange rate losses, among other factors.

In its latest rating for the NOC, Apoyo & Asociados said it expects the new refinery to increase refining margins, improve cost structure flexibility and stabilize cash flows.

And in its most recent report, Pacific Credit Ratings adds that Petroperú is "susceptible to political interference which could influence its long-term strategic line. The rating is limited by the high-level leverage that affects debt service coverage, low liquidity indicators, as well as the volatility of income influenced by international factors."

Petroperú's situation parallels its gradual return to the upstream sector, a process which has come under scrutiny due to the operator's limited funds, according to critics.

Petroperú already operates northwest onshore block I and is set to sign a license contract for northern jungle block 192.

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Ratings summary provided by Petroperú