Peru's state-run oil company Petroperu and Canada's Pacific Exploration & Production Corp (PEN.TO) are considering a partnership to develop a dormant oilfield in Peru's Amazon region, the companies said.
Pacific's Peru general manager, Ivan Arevalo, has expressed an interest in boosting the company's investment in oil lot 192 near the Ecuador border, which has been idle since last year due to pipeline ruptures, Petroperu Chief Executive Luis Garcia Rosell told journalists.
However, since its concession will go to Petroperu when it expires in 18 months, Pacific is looking to partner with the state-run company to guarantee continued access to the field, Garcia Rosell said.
"We're very enthusiastic about this," he said. "Pacific will not make larger investments if they don't see a possibility of extending the term. But if we participate...the situation would change and they would begin to make investments."
In a statement to Reuters, Pacific confirmed it was considering working with Petroperu "to jointly develop the potential" of lot 192.
"For this, a longer-term contract is necessary," the company said.
Garcia Rosell pointed to Petroperu's recent deal to take a 25 percent stake and become Santiago-based GeoPark Ltd's (GPRK.N) junior partner in another Amazon oilfield without investing its own funds as a model the Pacific deal could follow.
He said Pacific, which won a two-year concession to operate the 500,000-hectare (1,931-square-mile) field in 2015, would present its proposal to Petroperu next Friday. Peru is a relatively small oil producer, and Petroperu has long been absent from exploration and production.
The field produced 10,000-12,000 barrels per day before it stopped output last year when Petroperu closed its 1,106-kilometer (687-mile) pipeline after the first of what would become a dozen oil spills in 2016.
The spills have frayed Petroperu's relations with nearby indigenous communities. Last week, about 600 locals took control of lot 192 and demanded payment for use of their land. Pacific had said no payment was due at the time.
Garcia Rosell said the pipeline should resume operations in July after repairs to its three segments are complete.
The company is planning to begin issuing $3 billion in bonds in the coming months to help finance a $5.4 billion expansion of its Talara refinery, which could boost capacity to 95,000 bpd by 2021, up from 65,000 currently.
Garcia Rosell said banks have indicated that there is substantial market demand for the bonds.
