May 5, 2017 / 8:47 PM / 3 months ago

Petroperu and Canada's Pacific consider developing Amazon oilfield

3 Min Read

LIMA, May 5 (Reuters) - Peru state-run oil company Petroperu is considering a partnership with Canada's Pacific Exploration & Production Corp to develop a dormant oilfield in Peru's Amazon region, a Petroperu executive said on Friday.

Pacific's Peru general manager, Ivan Arevalo, recently expressed an interest in boosting the company's investment in oil lot 192, near the Ecuador border, which has been idle since last year due to pipeline ruptures, Petroperu Chief Executive Luis Garcia Rosell told journalists.

However, since its concession will go to Petroperu when it expires in 18 months, Pacific is looking to partner with the state-run company to guarantee access to the field for a long enough time to justify increasing its investment in the relatively small oil-producing country, Garcia Rosell said.

"We're very enthusiastic about this," he said. "Pacific will not make larger investments if they don't see a possibility of extending the term. But if we participate...the situation would change and they would begin to make investments."

Garcia Rosell pointed to Petroperu's recent deal to take a 25 percent stake and become Santiago-based GeoPark Ltd's junior partner in another Amazon oilfield without investing its own funds as a model the Pacific deal could follow.

He said Pacific would present its proposal to Petroperu next Friday. Petroperu, which has been absent from exploration and production for years, would likely not have any operational role.

Representatives of Pacific, which won a two-year concession to operate the 500,000 hectare (1,931 square mile) field in 2015, did not immediately respond to requests for comment.

The field produced 10,000-12,000 barrels per day before it stopped output last year after Petroperu closed its 1,106-kilometer (687-mile) pipeline after the first of what would become a dozen oil spills in 2016.

The spills have frayed Petroperu's relations with nearby indigenous communities. Last week, about 600 locals in the Amazon region took control of lot 192 and demanded payment for use of their land. Pacific had said no payment was due at the time.

On Friday, Garcia Rosell said the pipeline should resume operations in July after repairs to its three segments are complete.

The company is planning to begin issuing $3 billion in bonds in the coming months to help finance a $5.4 billion expansion of its Talara refinery, which could boost capacity to 95,000 barrels-per-day by 2021, up from 65,000 currently.

Garcia Rosell said banks have indicated that there is substantial market demand for the bonds. (Reporting by Luc Cohen and Teresa Cespedes; Editing by Leslie Adler)

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