Background

On October 9, 1968, the dictatorship of Maj General (General de Division) Juan Velasco Alvarado ordered the seizure and summary expropriation of the facilities of The International Petroleum Company (IPC), a subsidiary of Standard Oil of New Jersey, at the Talara refinery (Piura Department); carried out by General Fermín Málaga. This forced nationalization had a massive publicity effect, helped sway public opinion in favor of the military coup, and allowed the dictatorship to consolidate its grip on power. The date was declared by military Day of National Dignity and celebrated as a public holiday until the end of the dictatorship in 1980.^[5][6]

Beginnings

Petroperú was created the following year by law decree issued by General Juan Velasco Alvarado on July 24, 1969. The newly created company was chaired by another General, Marco Fernández-Baca Carrasco and had to face the challenges of operating and maintaining the recently nationalized oil industry with local personnel. It had to do this without resources or technical support from global oil players, who had been alienated by the forced nationalization of the military government.^[5][6]

The company and the government nevertheless had the assistance of Soviet technicians and were able to retain middle managers, surviving and even thriving despite reduced production capacity. Extraction and refining progressively increased owing to oilfield discoveries in the northern jungle (Loreto Department), association agreements that followed after Gen Velasco's deposition by another coup in 1975, and the construction of the North Peruvian Pipeline (Oleoducto Norperuano).^{[7][8][9][10][11][12][13][14][15][16]}

Present

During 2011, Petroperu participated in the construction of the Southern Pipeline, a project that aimed at improving the economic conditions in the south of the country. It also invested about 400 million dollars in the construction of the ethane pipeline that started in the city of Pisco, the same year.

In December 2020, the state oil company, at the special request of the Executive Branch, headed by President Francisco Sagasti, assumed the concession of the Natural Gas Distribution System by Pipeline Network of the South West Concession, for up to three years. This way, Petroperu takes over the administration of this temporary concession in order to guarantee the continuity of the provision of the public service of natural gas distribution through the pipeline network in the Arequipa, Moquegua and Tacna regions.

This assignment is assumed with full responsibility in a key period for the state company, which is in a modernization process that includes the implementation of important activities that allow it to evolve, maintaining the leadership and sustainability of the business, with transparency, and social and environmental responsibility.^[17]

In January 2021 it officially unveiled its new identity, the result of more than eight years of work in a transformation process that has resulted in a renewed and much cleaner version of the institution's image. With this change, Petroperu seeks to position itself in the Peruvian fuel market with a sustainable and competitive projection.^[18]

Also in 2021, it received authorization from the Executive Power to issue bonds worth up to $1 billion to finance the last phase of the modernization works of the Talara Refinery.^[19]

Capacity

Petroperú has a strategic importance in the provision of energy throughout the country. Its approximate refining capacity is 94,500 barrels per day (B/D), which represents 46% of Peru's total refining capacity. It is the owner of the Talara Refinery, the Conchán Refinery, the Iquitos Refinery, the El Milagro Refinery and the Pucallpa Refinery, five of the six refineries that exist throughout the national territory.^[20] It is known that it only operates four of these five refineries since the Pucallpa refinery is leased to Maple Gas^[21] and, on the other hand, the El Milagro Refinery has still been out of service since January 2015.

Derivatives

The company has the necessary coverage to meet the national demand because it has a presence throughout the country. It has the capacity to meet the requirements of foreign companies and is a strategic supplier to the Armed Forces and National Police of Peru.^[20]

The fuels and derived products produced by Petroperú are:

New Talara Refinery

The Talara Refinery Modernization Project is an engineering and construction megaproject that consists of the installation of new process units and facilities aimed at improving product quality, increasing the refinery's production capacity, and implementing more complex processes. and more advanced technology. The economic and environmental benefits are as follows:

• Desulfurize fuels.
• Improve the octane number of gasoline.
• Process heavier crude oils.
• Reduce the production of residuals.
• Implement new facilities that the modernized refinery will require.
• Produce cleaner fuels.^{[23][24][25][26][27][28][29][30][31][32][33]}

Lot 64

The objective of the Project is to extract the crude oil reserves discovered in the Situche Central field, in Lot 64, located in the Loreto region.

The Project design foresees a modular execution scheme that facilitates the putting into production of the discovery wells (early production) and that allows the development of the deposit, in accordance with the confirmation of its productive potential:

• Phase A: Putting Well SC-3X into production
• Phase B: Putting Well SC-2X into production
• Phase C: Comprehensive development of the Situche Central Field

Additionally, the project includes the drilling of an exploratory well to increase the hydrocarbon reserves in the lot.

The project was planned to be developed in accordance with the terms and conditions of the Joint Investment contract signed by Petroperú S.A. and Geopark Peru S.A.C. which included an initial participation of 25% and 75% respectively. However, in July 2020, Geopark Peru S.A.C. decided to abandon Lot 64.^[22] Petroperú accepted the assignment of 75% of the additional participation, thus obtaining 100% of the rights and obligations as a contractor.^{[39][40][10][41][42][43][44][45][46][47][48]}

Transportation of Heavy Crudes

Most of the oil to be transported through the North Peruvian Pipeline is classified as heavy crude (density below 20° API), so it is necessary to adapt this transportation system in order to transport said crude. The project has been called the Heavy Crude Transportation Project (PTCP).

The heavy crude from the lots located in the northern jungle of Peru will be transported by the North Branch of the ONP, from Andoas to Station 5 and from there to Bayóvar through Section II. Section I of the ONP (Station 1 - Station 5) will be used when the Perenco company transports its early production of 7 MBPD (July 2013) by river and delivers it to the ONP at Station 1 (San José de Saramuro), for its transfer to Bayovar.

ERP Modernization Project

The areas in which ERP is being implemented are the following:

• Finance
• Commercial
• Logistics
• Maintenance
• Refinement
• Human Resources

Other refinery Projects

The company has a feasibility study prepared by the Spanish company Fluor, for a future modernization of the Iquitos Refinery. It has also formed a Task-Force team to formulate a medium-term project for the modernization of the Conchán Refinery, another of its refineries located south of Lima. It will also explore lot 192, in which it is looking for partners.^{[49][50][51][52][53][54][55][56][57]}