November 21, 2024 [Reuters]- Peru’s indebted state-run oil firm could consider offering a minority stake to private investors in the second half of 2025, when the company hopes to emerge from a crisis and post profits, Chairman Alejandro Narvaez told Reuters on Wednesday.

At an interview in his office in Lima, Narvaez said the offering would only start when the company returns to profit, which he forecast to happen next year, in the range of $200 million to $250 million.

“Nobody buys shares in a company that has huge losses,” he said. “We could think about starting to offer those shares that are actually registered on the stock exchange in the second half of next year,” he said.

“The offering would be gradual, I’d be lying if I said I know if it’s going to be 10% or 20%, we’ll see how things develop,” he added.

PetroPeru’s losses are expected to grow to $960 million by the end of the year, but the chairman, who was appointed earlier this month, says he aims to reduce that number to $860 million.

On Monday, he announced PetroPeru will look to its creditors for new sources of financing to ease its debt burden and said he would launch a series of actions intended to reduce the firm’s losses, including hiring an international management company very soon.

Narvaez was named chairman, alongside six other board members, after the entire board tendered their resignations in September citing the company’s financial issues.

PetroPeru had previously said it needs $2.5 billion to continue operating, and in September, the government approved around $1.75 billion in financing to keep the country’s main fuel supplier afloat, something Narvaez said he would not do.

“The worry (bondholders and creditors) has is that we’re going to keep asking for more state financing,” Narvaez said, who held a conference call with bondholders earlier on Wednesday.

“As long as I’m here, I’ll make dauntless efforts so that doesn’t happen so that money can go to social programs.”

PetroPeru lost its investment grade from rating agencies in 2022 due to a crisis following an investment of $6.5 billion to modernize its Talara refinery.

The company issued bonds in 2017 and 2021 worth about $3 billion to finance the refinery. It also has a debt with a group of foreign banks for $1.3 billion, guaranteed by the Spanish agency CESCE.

Narvaez said the company would not issue more bonds and instead look for creditors.

PetroPeru, once a major crude producer, has seen production stall and is focusing its efforts on the Talara refinery.

Narvaez said he hopes the refinery will be producing at its full 95,000 barrel-per-day capacity by the end of the year and regain market share. The plan is to have a 38% market share by 2025, compared with the 28% expected in 2024, he said.

He said that he plans to hold talks with Colombia’s Ecopetrol and Ecuador’s Petroecuador to buy crude for the Talara refinery.

Since a privatization wave in the 1990s, PetroPeru was only involved in refining and marketing fuels. However, it returned to producing crude after leases with private companies expired in 2023.

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