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Peru's new government to oversee controversial law on Petroperu
PLATTS
LIMA
Petroleumworld.com 07 28 06
As Peru's President-elect Alan Garcia takes office on Friday, his new
government will oversee the implementation of a law that grants state-owned
oil company Petroperu the financial and administrative autonomy to speed up
the needed modernization of the company's refineries.Peru's Congress earlier this month overrode a presidential veto of the
original bill exempting Petroperu from decisions by the state holding company
and a state agency that supervises investment projects of state entities.
Advocates for the law argue that Petroperu needs the autonomy to make quick
decisions to remain competitive."The law was the subject of debate for two years in Congress -- it will
give agility to the company in a market that is very volatile," Juan Valdivia,
named Thursday as minister of energy and mines in Garcia's first cabinet, told
Platts in an interview.Petroperu needs to modernize the 62,000 b/d Talara refinery, which
competes with Repsol YPF's La Pampilla refinery, as the industry seeks to meet
government requirements for lower sulfur levels in diesel by 2010. The cost of
upgrading Talara and several smaller refineries is put at between $250 million
and $400 million, but Valdivia said the final scope of the upgrades will
depend on the results of a study.Soon after Congress overrode the veto, officials of President Alejandro
Toledo's government, which ends five years in office today, criticized the
measure, focussing on the potential for corruption.Valdivia, a member of Garcia's APRA party, denies Petroperu will become
the "petty cash box" of the new government. He said the company will still be
subject to the controls of the Comptroller's Office, as well as being subject
to other government controls on procurements.The issue of whether Petroperu can go into debt under the new law is
outstanding. The government has a ceiling on external indebtedness. Finance
Ministry officials initially mentioned the possibility of issuing a decree to
deal with that issue, but a ministry spokesman told Platts that all decisions
on Petroperu have been left to the incoming administration.Valdivia said his ministry will be responsible for naming "a board of
efficient professionals with ample experience in the oil industry" to ensure
professionalism and prevent corruption.The law's sponsors say current oil prices demonstrate why Petroperu
should be integrated. The new law allows Petroperu to return to E&P
activities. Perupetro, the state oil and gas licensing and contracting entity,
will continue to be in charge of signing E&P contracts.- Mary Powers, newsdesk@platts.com
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Platts 27 07 06
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