Peru to seek Spanish funds for Talara refinery

Peru's cabinet chief Fernando Zavala and economy minister Alfredo Thorne will travel to Europe next week to seek US$3bn in financing for state oil company Petroperú's overhaul of the Talara refinery.

The funds would come from Spanish banks and that country's export credit agency CESCE, Radio Programas del Perú (RPP) quoted Thorne as saying.

BNamericas' Risk Analytics highlights that the project was originally set to be completed in December 2018 but the latest estimate indicates it will not be finished before June 2019.

The minister added that the government will inject 1.1bn soles (US$325mn) of capital into the NOC.

The government recently published a supreme decree that calls for the reorganization and improvement of Petroperú's corporate governance, and declares of public need and national interest the safe operation of the Norperuano oil pipeline, which came online in the 1970s and has been suspended since February due to spills.

"Petroperú during the previous government took on debt at very high rates to finance the refinery without having the money, has taken on very expensive short-term loans and all this loan restructuring has to be done," according to Thorne.

ALSO READ Is Peru's Talara refinery project worth it? Víctor Saavedra, Consultant

NORPERUANO

Thorne also said that the capital injection would help Petroperú repair Norperuano.

On Wednesday, a special congressional investigative committee set up to look into spills along the 854km duct continued hearings with the participation of former Petroperú heads Humberto Campodónico and César Gutiérrez Peña, and former energy and mines minister Carlos Herrera Descalzi, congress reported.

At least 10 spills were recorded along the pipeline in 2016 that Petroperú attributes to third parties.

Saavedra argues that lack of major maintenance has led to points of corrosion over 60% of Norperuano's length.

Last month, energy and mines minister Gonzalo Tamayo Flores said a company would be hired to carry out a study of the embattled oil transport infrastructure.