Petroperú rules out IPO in 2015

Peruvian state oil company Petroperú, which was authorized to launch an IPO in 2013, won't sell shares this year, CEO German Velásquez said.

The company, which has had four CEOs since 2011 and had to deal with two leaks at its 200,000b/d northern jungle pipeline last year, isn't in conditions to sell shares, Velásquez said. The company also faces a strike by workers planned for April 8.

"In order to have a successful IPO, Petroperú needs to be in attractive conditions for the market," Velasquez said in a meeting Monday with foreign correspondents at the company's offices in Lima. "Petroperú's financial situation isn't at its best right now."

After pulling out of a joint venture last week with Peru's GMP for blocks III and IV in the Talara Basin, the company will continue to seek opportunities to return to upstream operations nearly two decades after selling off its production blocks, he said.

Petroperú, which is also a partner with Bermuda-based GeoPark Holdings in block 64 in the Marañón Basin, believes blocks III and IV are too small to risk the company's capital, he said. Block III produces on average 1,600b/d of crude oil, while block IV produces 700b/d, according to state oil contracting agency Perupetro.

"There are higher profit margins in extraction than in refining," Velásquez said. "We aim to return to the upstream sector, but we want to do it right."

The company, which plans to focus on a US$3.5bn upgrade of its 62,000b/d Talara refinery, may import crude oil if output at northern jungle fields operated by Repsol and Perenco is insufficient to supply the refinery, he said.

The state will finance US$2.7bn of the Talara upgrade works, while the company is negotiating a US$500mn bridge loan from French bank Société Générale and has yet to line up the remainder of the funds, he said.

Petroperú, which sold off its production blocks and 102,000b/d La Pampilla refinery in 1996, operates four refineries with total capacity of 80,000b/d and the northern jungle pipeline. The Talara refinery modernization, which is being handled by Spain's Técnicas Reunidas, aims to boost capacity 50% by 2019.