Peru’s Government Opens Petroperu to Private Investment

In a significant development for the struggling state-owned oil company Petroperu, the Peruvian government has approved an emergency decree facilitating private investment in the firm. This decision comes as the company grapples with rising losses and an overwhelming debt burden.

Emergency Measures to Stabilize Petroperu

On January 2, 2026, President Jose Jeri announced this critical move, aligning with efforts to stabilize an entity that has faced mounting financial challenges. The new measure enables the restructuring of Petroperu into one or more asset units, effectively opening avenues for private participation in its key operations.

Key Operations Impacted

One of the focal points of this restructuring includes the Talara refinery, which recently underwent a substantial $6.5 billion upgrade. In addition to this flagship operation, Petroperu oversees or holds concessions for six crude oil blocks, although their production levels remain limited. The company also manages an extensive nationwide fuel distribution and marketing network.

Financial Challenges Over the Years

The Ministry of Energy and Mines of Peru highlighted the urgency of the decree, stating its aim to ensure that Petroperu meets its financial obligations through improved technical management of its assets. This move strives to lay the groundwork for the company to achieve self-sufficiency.

As of late 2025, the financial situation at Petroperu is critical, with accumulated losses reaching approximately $479 million between January and October and outstanding debts to suppliers hitting $764 million by December. These alarming figures compound the $774 million in losses reported the previous year.

Debt and Credit Rating Concerns

The company’s financial woes have been exacerbated by the skyrocketing costs associated with the Talara refinery modernization, which ultimately doubled the original investment estimate. As a result, Petroperu lost its investment-grade credit rating in 2022. In response to these challenges, the government has intervened multiple times, injecting about $5.3 billion in financing from 2022 through 2024.

Environmental and Political Scrutiny

Alongside its financial struggles, Petroperu has also faced environmental scrutiny. In 2024, authorities declared an “environmental emergency” following an oil spill along the northern coastline of Peru, affecting areas ranging from 47 to 229 hectares (approximately 116 to 566 acres).

The restructuring effort for Petroperu unfolds against a backdrop of ongoing political instability in Peru. Recent years have seen several presidents unable to complete their terms, including Dina Boluarte, who was impeached in October. Her successor, Jeri, has faced challenges in stabilizing leadership within Petroperu, appointing three different board chairs in just three months.

Conclusion

The decision to open Petroperu to private investment represents a pivotal step in addressing the financial and operational challenges faced by the company. As the government seeks to secure the future of Peru’s energy sector, the balance between private participation and state oversight remains crucial amid a backdrop of political volatility.

• Emergency decree allows private investment in Petroperu.
• Financial strain with accumulated losses of $479 million in 2025.
• Talara refinery modernization costs have ballooned significantly.
• Political instability continues to impact leadership at Petroperu.