Energy Advisor

Jose L. Valera, partner at Mayer Brown in Houston: “Petroperú was asking the government for $2.5 billion comprised of $1.15 billion in cash as an equity contribution, the capitalization of a $750 million loan that the government previously granted in 2022 and payment guarantees to support lines of credit for the import of crude and fuels. The government rejected the $1.15 billion cash contribution and may yet relent on the rest. The root of Petroperú’s financial problems is deep and has two main sources: billions borrowed to substantially upgrade the Talara refinery, and a recurring operating deficit because its costs and expenses are higher than its revenues. Peru does not produce all the oil it consumes. Petroperú imports crude oil for refining and also imports diesel and other fuels. A big portion of fuel sales in the domestic market is for a price below cost because…”