Petroperu Advances Financing for Upgrade to Talara Refinery

By Ryan Dube

LIMA, Peru--Peru's state-owned oil company Petroleos del Peru SA (PETROBC1.VL) said Thursday that it has about half of the financing needed for the first stage of a project to modernize its Talara refinery.

A spokeswoman from the company, known as Petroperu, confirmed that French bank Societe Generale S.A. (SCGLY, GLE.FR) has 40% to 50% of the financing needed for the project's first stage, which is worth a total of $1.3 billion.

Societe Generale was hired last year by Petroperu to provide financial structuring services for the Talara project. The total cost of the project is estimated to be more than $3 billion.

The upgrade is aimed at reducing levels of sulfur and allowing the refinery to refine the heavy crude that will be extracted in the future in northern Peru. Petroperu also wants to increase oil production at Talara from a capacity of 65,000 barrels a day to 95,000 barrels a day.

In addition to refineries, Petroperu also runs a pipeline and gas stations and plans to return to upstream activities soon after getting out of producing oil more than 15 years ago.

Petroperu's spokeswoman declined to comment on a report that the company had submitted a offer to acquire refinery Refineria La Pampilla SAA (RELAPAC1.VL), which is owned by Spain's Repsol SA (REP.MC, REPYY). A board member from Petroperu also declined to comment. A spokesman from Respol in Peru wasn't immediately available.

Earlier this year, Peru's government did say that it was interested in buying some 200 gas stations owned by Repsol in Peru. The Spanish company has been looking to sell some of its assets in the Andean country.

In February, Repsol announced plans to sell its liquefied-natural-gas assets in Peru, and some other countries, to Royal Dutch Shell PLC.

Write to Ryan Dube at [e-mail]

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