Petroperú: Who makes up the current board of directors and what immediate challenges does the company face?

The engineer Carlos Vives Suarezwho was serving as interim president in his capacity as acting vice president, officially assumed the chairmanship of Petroperú’s board this week.

With this, the state oil company strengthens the cabinet of six directors that will have to face a new stage in which it will have to recover the confidence of investors and consolidate the extractive business model -through vertical integration- for the coming years.

Who else accompanies Vives Suárez? To begin, we must be clear that of the six, five are appointed by the General Shareholders’ Meeting (JGA), made up of the Ministry of Economy and Finance (MEF) and the Ministry of Energy and Mines (Minem), while, the sixth is appointed by the workers.

As the previous director on behalf of the workers was Oscar Vera Gargurevich, then manager of the Talara Refinery and today the new head of Minem, the position was appointed to Antonio Leonardo Manosalva Alarcóncurrent manager of the North Peruvian Pipeline Department (ONP).

Another of the recent changes occurred in October 2022, with the entry of the industrial engineer Edmundo Raúl Antonio Lizarzaburu Bolaños, who was elected during the administration of the former Economy Minister, Kurt Burneo, to replace Luis Gonzales Talledo on the board. The latter stepped aside for health reasons.

It is also counted among the recent admissions to the engineer Pedro Oswaldo Chira Fernandez, who worked as an independent consultant and former vice president of the Peruvian Association of Hydrocarbons and Energy Professionals (APHE). This, due to the empty seat that remained from the previous administration.

These three professionals join Carlos Edgar Vives Suárez, Victor Murillo Huaman Y Jose Olivares Canchari to form the new board of directors that will have, in the short term, the challenge of accepting the agreement for a new auditor of the financial statements of Petroperú for the period 2021-2022.

Petroperu: financial statements 2022

In October 2021, Hugo Chávez Arévalo was appointed as general manager and member of the Petroperú board of directors, an equivocal political decision that would lead months later not only to his departure and investigation by the Prosecutor’s Office, but also to a break in relations between the oil company and its sources of financing, due to the delay in the delivery of the audited statements for the 2020-2021 period.

The following management, in charge of the engineer Humberto Campodónico, managed to restore relations with the Pricewaterhouse Coopers (PwC) audit and, after the delivery of the financial data for the absent period, the investment grade of the company was relatively recovered.

Now, the new management of Carlos Edgar Vives Suárez must define which will be the international auditing company that will review the accounts of the state company for the year 2022, a report that must be presented until March 31. It should be noted that there are four major audit firms in the world: KPMG, Deloitte, EY and PwC.

“Petroperú has US$3,000 million in bonds abroad, issued in the US In addition, it has US$1,300 million in a loan from several banks. So, US law obliges you to protect the investor. As it does? Through audited financial statements, because if they do not exist, it is the regulatory authority of that country that will have the responsibility before its investors for endorsing a capital in dangerous terrain”, explains Campodnónico.

Petroperú: Talara and a new business model

The second great challenge that the management of Carlos Edgar Vives Suárez will have is to culminate with the startup of the New Talara Refinery. At this time, Petroperú is a net fuel importer, that is, it does not have access to oil income that translates into a refining margin (production) in its favor.

Repsol, Exxon Mobil and Valero, the other fuel traders in Peru, do have this profit margin -which can reach US$ 20 per barrel in these days of energy crisis-, since they bring it already produced from their own headquarters in abroad.

However Petroperu it is forced to simply resell the fuel that has already been refined from abroad, and this not only prevents it from generating a higher profit margin to pay off its debts like any private company, but also from delivering competitive prices to the domestic market.

“Petroperú already brings it at an import price. With this, it is at a disadvantage compared to its competitors, since it has more problems to market and sell. It doesn’t have many discounts. Precisely, the delivery of the Refinery will allow it to have solvency and liquidity, something that it lacked at the time and for which it had to borrow so as not to leave the domestic market unsupplied,” said Campodónico.