Peru's state oil company says fuel output could stop without $2 billion in loans

• Two major refineries (Talara and Conchan) risk stopping production; Talara currently operates at 60,000 barrels per day, well below its 95,000-bpd capacity due to insufficient funds to purchase crude
• Petroperu's debt crisis stems from a $6 billion Talara refinery modernization that exceeded its original budget and resulted in the company losing its investment-grade rating in 2022
• Despite receiving $5.3 billion in state support over the past three years, private banks are willing to provide only $2 billion of the company's total $2.5 billion financing need

Summary: Peru's Petroperu Faces Production Halt Without $2 Billion Emergency Financing

Key Developments:

Peru's state-owned oil company Petroperu urgently requires approximately $2 billion in private loans backed by state guarantees to avoid halting fuel production at its refineries. Chairman Roger Arevalo warned that fuel shortages could occur "in the coming days" without timely financing.

Financial Situation:

• Total debt has reached $7.9 billion
• Total financing need: $2.5 billion ($2 billion from private banks currently available)
• Company has already received $5.3 billion in state support over the past three years
• Lost investment-grade credit rating in 2022

Operational Impact:

• Two major refineries (Talara and Conchan) at risk of stopping production
• Iquitos refinery in the Amazon has already ceased operations
• Talara refinery operating at 60,000 barrels per day, well below its 95,000-bpd capacity due to insufficient funds for crude oil purchases

Contributing Factors:

The crisis stems from financial difficulties exacerbated by high oil prices driven by Middle East conflicts. The Talara refinery's modernization project, completed in 2023, exceeded its original budget and cost over $6 billion, significantly contributing to the debt burden.

Government Response:

Peru's government is preparing an emergency decree to facilitate private financing with contingent state guarantees but without direct state funding. A financial restructuring decree was approved in late 2025.

Market Implications:

The situation threatens Peru's fuel supply stability and highlights risks in state-owned energy enterprises. Immediate fuel shortages could impact the Peruvian economy and demonstrate ongoing vulnerability to global oil price volatility.