Peru Approves Urgent Reform for State-Owned Petroperu

Peruvian Government Takes Steps to Stabilize Petroperu

The government of Peru has approved an emergency decree allowing private investment in portions of the state-owned company Petroperu, amid efforts to stabilize a firm impacted by rising losses and debts. Interim President Jose Jeri announced the decision just before the new year began.

The decree facilitates the reorganization of Petroperu into one or more asset units, paving the way for private participation in key operations. This includes the flagship Talara refinery, which has recently been upgraded at a cost of $6.5 billion. In addition to the refinery, Petroperu operates or holds concessions for six oil blocks with limited production, along with a national distribution and fuel marketing network.

The Ministry of Energy and Mines of Peru stated that the decree aims to "ensure financial obligations are met through technical management of its assets, laying the groundwork for Petroperu to become a self-sustaining company." The ministry highlighted that the company's financial position is "particularly sensitive," citing accumulated losses of $479 million between January and October 2025, along with debts to suppliers totaling $764 million by December. These figures come in addition to reported losses of $774 million in the previous year.

The financial burden on Petroperu has been exacerbated by debts related to the modernization of the Talara refinery, which ultimately cost twice as much as the initial estimate and led to the loss of its investment-grade credit rating in 2022. Since then, the government has repeatedly intervened to support the firm, providing approximately $5.3 billion in funding between 2022 and 2024.

The company, deemed essential for Peru's energy security, has also faced ecological scrutiny. Authorities declared an "ecological emergency" and launched an investigation following an oil spill along a stretch of the country's northern coast in 2024, affecting approximately 47 to 229 hectares. The effort to restructure Petroperu comes against a backdrop of ongoing political instability in Peru. Several presidents have failed to complete full terms in recent years, including Dina Boluarte, who was ousted by Congress in October. Her successor, Jeri, has struggled to establish stable leadership at Petroperu, appointing three council presidents within just three months.

In this context, Peru is grappling with ongoing political volatility, economic uncertainty, and public pressure for stronger control over state institutions.