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Petróleos del Perú – PETROPERÚ S.A. VAAA Corporate Overview Update

Finance Corporate Management

August 2019

1 Content

I PETROPERÚ S.A. at a Glance

II PETROPERÚ S.A.: A Strategic Component of the Peruvian Energy Matrix

III Talara Refinery Modernization Project (PMRT)

IV Financial Performance

V Appendix

2 Company Overview and Strategic Objectives

Company Overview

• Founded in 1969, Legislative Decree No 43. Established in 1981 as a Public Limited Company.

• State-owned company but regulated by private legislation. Excluded from the scope of FONAFE1 and regulations of SNIP2. Besides, it has its own procurement regulations.

• Strategic role: Ensure fuel supply across the country, with social, environmental and financial responsibility.

• Allowed to participate in the whole value chain business of hydrocarbons. Currently, on the way to be part of the usptream business.

• 45% refining capacity and 46% market share.

• Strategic objectives 2019 – 2023: Supply the market efficiently, strengthen PETROPERÚ S.A. through the management of human talent and corporate governance, ensure financial sustainability, among others.

2019 Strategies

• Improve working capital management (longer payment terms, inventory optimization)

• Start an ongoing program of costs reduction (US$ 50MM over 2019 budget)

• Launch a Voluntary Retirement Plan (estimated cost 2019 = PEN 57MM).

• Switch from a costly medical self-insurance program to a private administration program (EPS).

• Adjust our fuels purchasing procedure in order to obtain lower prices (extended round of negotiations, Asian suppliers).

• Initiate inventory price hedging.

• Reformulate fuels pricing policy based upon financial objectives and total costs allocation.

1 National Fund for State Financing: Holding company of Peruvian state-owned companies. 2 Public Investment System: System to regulate all public investment at national level. 3 100% Government Owned – Clear Quasi-Sovereign Profile

Direct Link to the National Government Ongoing Government Oversight Listed in the BVL supervised by the SMV (1) Ministry of Economy Ministry of Energy GENERAL SHAREHOLDER MEETING and Mines and Finance

MEM MEF V. ME V. MH G.S. MEM 60% 40%

The Ministry of Energy and Mines chairs all Shareholders’ Meetings Each of the 5 shareholders has equal voting power (20%)

Governmental Commitment to PETROPERÚ S.A. • The General Shareholder Meeting is either mandatorily annual or extraordinary (any time)

• Capital Injection: US$ 325 million capital injection (2017), exclusively for the • The mandatory annual, previously convened by the Board of Directors, will necessarily Modernization of Talara Refinery Project (PMRT). Besides, between 2012 – 2016, meet within the first three (3) months of each fiscal year. US$ 25.7 million capital injection for environmental remediation purposes. • All long-term debt undertaking decisions are subject to approval by the Ministry of • Distributable Profits: PETROPERÚ S.A. is authorized to capitalize 100% of its Economy and Finance (Public Credit team). distributable profits and reinvest it in current or future CapEx. Besides, it is not obliged to distribute dividends. PERÚ RATING AGENCY PETROPERÚ S.A. • Other Supporting Actions: Government provided for gradual implementation of new sulfur caps by region (2006), until refineries have been adapted. BBB+ BBB- • Tax return for the application of tax credit (VAT) in the northern jungle of (Stable) (Stable) (2015). BBB+ BBB+ • Transfer of retirement pensions fund (privatized units´ employees), to the National Pension Office (ONP) (2016). (Stable) (Stable) • Guarantee: The government committed to grant PETROPERÚ S.A. a guarantee up to US$ 1 billion to support its financial obligations derived from the PMRT, as long as PETROPERÚ S.A. does not have the capacity to assume its repayments. (1) Stock Exchange (“BVL”), Securities Market Superintendence (“SMV”) 4 Corporate Governance Framework Supported by an Experienced Board of Directors

Carlos Paredes Summary Current Board of Directors • PhD in Economics & Master in International Economy and Development - Yale University (U.S.). • Economist from the Universidad del Pacifico (Peru). Carlos Paredes Lanatta • Consultant in economics, finance, energy and fishery matters. Chairman of the Board

Chairman • Chief of the Advisors´ Team at the Ministry of Economics and Finance (1999).

• Advisor of the Ministry of Production and the Ministry of Planning (Venezuela). Vice Chairman of of ViceChairman theBoard Hernán Barros Summary Cruchaga HernanBarros • MBA from the University of Texas at Austin: McCombs School of Business (U.S.). • Economist from the Universidad del Pacifico (Peru). • Advisor of the Ministry of Economy and Finance (August 2016 - Present). Vice Vice • Director of Fondo Mivivienda. Chairman • Portfolio manager at Credifondo (Banco Crédito Peru Group). • Broker/Dealer: Credit Suisse Securities.

Rául Pérez-Reyes Summary

• PhD in Economics from the University of Las Palmas de Gran Canaria (Spain). Independent Director Independent • Master's Degree in Economics at Center for Research & Economic Teaching (CIDE) (Mexico).

• Economist from Universidad de Lima (Perú). Del V. Cabrejo Carmen José Minister of Production (2018 – 2019).

Director • • Vice Minister of Energy (2015 – 2017). Raúl Pérez-Reyes Espejo Jaime A. Aguirre Guarderas Director José Cabrejo Summary Director • Ph.D. Candidate in Law, Master's Degree in International Economic Law and Layer, from the • The Board is made up of 6 members, 5 appointed by the Pontifical Catholic University PUCP (Peru). Government, 1 by PETROPERÚ's employees. Out of the • Master of Law in Securities and Financial Regulation by the Georgetown University (U.S.). 5 directors appointed by the Government, 2 must be • Master's Degree (candidate) in Finance and Corporate Law by ESAN University (Peru). independent (Mr. Barros and Mr. Cabrejo, who have been Director • Director - Manager of International Business Legal Advice. appointed pursuant to the Board´s regulations). • Legal Advisor of Prima AFP, Aero Transporte, Board of Prominvest and various public bodies. • The Director appointed by the employees is not currently Jaime Aguirre Summary able to exert his role. • MBA from the University of Pace, New York (U.S.). • Senior Management Program (PAD) from the Universidad de (Peru). • Any decision made by the Board requires at least 50% + • Economist from the Universidad del Pacifico (Peru). 1. For any major decisions the Chairman of the Board • Chairman of the Board at Cargo Transport, Grupo Campos.

Director must be also present. • Member of the Board in various institutions and companies. • General manager at Compañía Molinera del Centro. 5 Peru’s National Oil Company

Nationwide Transport, Refining and Distribution Network Key Credit Highlights

• PETROPERÚ S.A. has the largest oil supply chain at national level.

• PETROPERÚ S.A. supplies to all 24 regions of the country. Distribution Ships Nor Peruano Oil Pipeline • Market Share as of April 2019: 46%. Rail Train Talara Piura • Number of clients: 1,915 (wholesalers, miners, land transporters, petrol Petroperú Bay ovar stations, airlines, among others). El Milagro Ref ineries Yurimaguas Eten/ • Sales Plants(1): 28 across the country. It includes 10 Airport Plants of which Nor Peruano 01 is operated by a third party(2). Oil Pipeline Salav erry/ (2) Trujillo • Port Terminals(3): 11 (8 are operated by third parties). Airport Plants Operated by Petroperú Villa de Pasco Supe • Number of petrol stations (PETRORED) as of June 2019: 646.

Airport Plants Operated • Number of outsourced vessels: 04 permanent (Trompeteros, Chira, by Third Parites Conchán Urubamba and Camisea); 01 occasional (Aquila). Cuzco Sales Plants or Terminals Owned and Operated by Pisco • Capacity Nor Peruvian Oil Pipeline (ONP): 25 KBPD Northern Branch, PETROPERÚ Section I 20 KBPD and Section II 100 KBPD. Sales Plants orTerminals Owned and Operated by Third Paties Mollendo • Number of employees: 2,216. Ilo Billing Of f ice • PETROPERÚ S.A. is supplied by local (67%) and imported crude oil (33%). • Imported crude oil is processed in Talara and Conchan refineries.

• Local crude oil is processed in Talara and Iquitos refineries. (1) Installations to store and dispatch fuels. (2) Third parties operate, either the airport plant or the port terminals, through a concesion contract. • Imported crude oil is transported by vessels to Talara and Conchan (3) Installations to load/unload hydrocarbons, contained in storing tanks and vessels, respectively. refineries.

6 Content

I PETROPERÚ S.A. at a Glance

II PETROPERÚ S.A.: A Strategic Component of the Peruvian Energy Matrix

III Talara Refinery Modernization Project (PMRT)

IV Financial Performance

V Appendix

7 PETROPERÚ´s Value Chain

Other Assets: (3) Pucallpa Refinery (leased to Maple Gas) Offshore Fields (leased to Savia Peru)

Refining Distribution Commercialization Exploration and Transportation • Talara Refinery (65 kbpd) • Sales Plant • Supplier in the mining & Production • North Peruvian Oil Pipeline • Conchan Refinery (15.5 kbpd) • Terminals • industry sector, • Block 64 • (capacity ~57mn bbl / year) • Iquitos Refinery (12 kbpd) • Maritime/river/land fleet • Supplier to wholesalers • Block 192 • Maritime and river fleet • El Milagro Refinery (2 kbpd) (1) • Storage • National network of affiliates fuel and gas stations (2)

Talara Conchan Iquitos El Milagro (1)

Primary Distillation Unit: 65 kbpd Primary Distillation Unit: 15.5 kbpd Primary Distillation Unit: 12 kbpd Primary Distillation Unit: 2 kbpd Vacuum Distillation Unit: 29 kbpd Vacuum Distillation Unit: 9 kbpd Auxiliary Services Auxiliary Services Catalytic Cracking Unit: 19 kbpd Auxiliary Services Auxiliary Services

1. El Milagro refinery is currently closed because of lower crude volume coming from Block 8. The demand from its local market is being fulfilled with volume transferred from the Talara Refinery. No date has been established to resume operations. 2. PETROPERÚ does not own gas stations but maintains exclusive agreements (3-year, renewable) with 648 affiliated service stations. 3. Lease payments of USD1.2m/yr and USD10m/yr for each asset, respectively. 8 Leading Refining Company in the Country

Main Stockholder Refinery Capacity (KBPD) % COLOMBIA Talara 65,000 30.0% ECUADOR Conchán 15,500 7.1% PETROPERÚ S.A. Iquitos 12,000 5.5% TALARA EL MILAGRO 65 KBPD TUMBESTUMBESTUMBES 2 KBPD El Milagro* 2,000 0.9% IQUITOS Pucallpa** 3,300 1.5% PIURAPIURAPIURA LORETOLORETOLORETO 12 KBPD Private Refineries

LAMBAYEQUELAMBAYEQUELAMBAYEQUE AMAZONASAMAZONAS LAMBAYEQUELAMBAYEQUELAMBAYEQUE AMAZONASAMAZONAS Repsol La Pampilla 117,000 54.0% CAJAMARCACAJAMARCACAJAMARCA SANSANSAN MARTINMARTINMARTIN BRAZIL Pluspetrol Shiviyacu 2,000 1.0% LALALA LIBERTAD LIBERTADLIBERTAD PUCALLPA Total 216,800 100.0% 3.3 KBPD Source: Relapasa ANCASHANCASH HUANUCOHUANUCO ANCASHANCASH HUANUCOHUANUCO * It is currently closed.

UCAYALIUCAYALI ** It is leased to Maple Gas by PETROPERÚ S.A. LA PAMPILLA PASCOPASCOPASCO UCAYALIUCAYALI 110 KBPD

JUNINJUNINJUNINJUNIN LIMALIMALIMA JUNINJUNINJUNINJUNIN • PETROPERÚ S.A. operates 45% of the commercial refining capacity installed in the CALLAOCALLAOCALLAO MADREMADRE DEDE DIOSDIOS country and the remaining 55% is operated by private companies.

CONCHÁN HUANCAVELICAHUANCAVELICA HUANCAVELICAHUANCAVELICA CUSCOCUSCOCUSCO (1) 15.5 KBPD • The capacity utilization rate was 71.3% and 72.3% in 2018 and 2Q19, respectively. AYACUCHOAYACUCHO (R. Utilization 67.4 vs 68.4 KBPD) APURIMACAPURIMAC ICAICAICAICA APURIMACAPURIMAC

PUNOPUNOPUNO • Production was 104.7 KBPD and 110.4 KBPD in 2017 and 2018, BOLIVIA respectively. AREQUIPAAREQUIPA • Pluspetrol and Pacific have small non-commercial refineries that process crude MOQUEGUAMOQUEGUA only to supply fuels for the operation of blocks 8 and 192, respectively. TACNATACNATACNA (1)Defined crude refinery utilization (in thousands barrels per day CHILE for the period) divided by atmospheric distillation refining capacity. 1191117_1.wor | NY008W18 9 Nationwide Commercialization with Leading Market Position

• Main products (derivatives of crude oil): Number of Barrels Sold per Day

Main Products % MS Used for 200 180 Liquified petroleum gas 12% Mainly for domestic and vehicular use 160 145 145 152 144 (LPG) 140 Diesel 60% Transport, industry and electric power generation 120 100 Gasolines / Gasoholes 65% Transport 80 60 Jet Fuel 18% Air transport 40 KBPD Fuel Oil 47% Industrial 20 0 2016 2017 2018 2Q19 • The composition of sales by channels: wholesalers (46%) and direct sales (54%). Within direct sales, 30% corresponds to retail.

• Main competitors: Repsol, PBF (Valero), Exxon Mobil, Global Fuel, Black Energy, Market Share Pluspetrol, Solgas and Zeta Gas. 70% 65% Internal Market External Market 60% Service Income Sales Sales 55% 51% Revenue 88% 10% 2% 50% 50% 47% 46% 45% • Crude oil transportation service through the 40% North Peruvian Oil 35% Pipeline (“ONP”). 2016 2017 2018 2Q19 (*)

• Rental of assets (port terminals, off-shore (*) Information as of April 2019. infrastructure, land, etc).

10 Fully Operational Nor Peruvian Oil Pipeline

Total Length Andoas Station • Length: 1,106 km. Vol Transported (KB) 1,106 Km Northern Branch 252 Km. Ø = 16" 25 KBPD, at 700 cSt@25°C • 8 pumping stations. 5,000 Current Situation: 4,236 TUMBESTUMBESTUMBES LORETOLORETOLORETO TUMBESTUMBESTUMBES 4,000 3,713 All Sections are in Morona • 3 Sections: Section I, Section II and Northern Branch operation. Station AMAZONASAMAZONAS 3,000 • Total of 42 years of operation. Nearly 1,000 MMB 1,901 Station 5 2,000 Section II Station 1 transported. 70% ORN, 30% Section I. 548 Km. Ø = 36" 100 KBPD, at 700 cSt@25°C Station 6 613 PIURAPIURAPIURA Section I 1,000 PIURAPIURAPIURA 306 Km. Ø = 24" 20 KBPD, at 700 cSt@25°C • 2016 – 2019: 25 incidents, 80% were pipeline cuts and - Bayóvar Station 9 Station 7 perforations for robbery (13 in 2016 and 06 in 2017). Terminal 2016 2017 2018 To Jun Station 8 LAMBAYEQUELAMBAYEQUELAMBAYEQUE 2019 SANSANSAN MARTINMARTINMARTIN CAJAMARCACAJAMARCACAJAMARCA

1191117_1.wor | NY008W18 LALALA LIBERTAD LIBERTADLIBERTAD Block Operator 39 PERENCO (Europe) Block 67 67 PERENCO (Europe) Block 86 Ecuador Block 39 64 PETROPERÚ S.A. / GEOPARK (US) Block 64 95 PETROTAL (Canada) Block 192 116 PACIFIC STRATUS ENERGY (Canada) Block 8 UCAYALIUCAYALI Block 116 192 Currently, PACIFIC STRATUS ENERGY (Canada) 2020/21 PETROPERÚ S.A. Bayóvar Block 95 8 PLUSPETROL (Argentina) Terminal 131 CEPSA (Spain) 86 PETROAMAZONAS (Ecuador)

1191117_1.wor | NY008W18 There is an important potential for proven reserves (500 MMB) in the northern jungle of Peru and south of Ecuador, whose production will require the ONP to be in better conditions to transport higher production volumes. 11 Exploration and Production Update

• Upstream business is one of PETROPERÚ S.A. activities allowed by law (Legislative Decree No 43).

• Under-negotiation (Parliament) new Hydrocarbons Law will give PETROPERÚ S.A. the possibility to get a 25% share for all new blocks to be granted. The earliest (2022 – 2025) ones to be expired - 5 blocks (northern jungle and coast).

• Currently, PETROPERÚ S.A. is partner for the operation of Block 64, and will assume the operation of Block 192, both situated up north in the Peruvian jungle and near to ONP.

BLOCK 64 BLOCK 192

• GeoPark (Operations Partner of PETROPERÚ S.A.) • Current Operator: Frontera Energy • 55 MMB of reserves (2P), light crude oil • 86 MMB of reserves (1P), heavy/light crude oil • Estimated investment: 500 USD MM • Estimated investment: 800 USD MM • Estimated initial production 10 MBD. It will be transported through our • Ongoing Negotiation Terms/Conditions of the License Agreement with oil pipeline (ONP) Perupetro S.A. PETROPERÚ S.A. would sign it by 1Q20 • 1Q21, start of commercial activity • Block is currently producing 10 MBD and being transported through ONP • Pending approval Environmental Impact Study • Business model: Partner makes the investment and recovers it with the • Business model: Partner makes the investment and recovers it once production. PETROPERÚ S.A. could start with more of 25% share up to block starts production. PETROPERÚ S.A. starts 25% share up to 50% 50% as investment is recovered as investment is recovered

12 Content

I PETROPERÚ S.A. at a Glance

II PETROPERÚ S.A.: A Strategic Component of the Peruvian Energy Matrix

III Talara Refinery Modernization Project (PMRT)

IV Financial Performance

V Appendix

13 PMRT Overview

The PMRT is a megaproject that involves the engineering, procurement and construction (EPC) of 14 Process Units for the refining of crude oil and 05 Auxiliary Units to provide for complementary services and infrastructure.

Main Features Sources of Financing

• Investment of ~ US$ 4,700MM. Source US$MM • High complexity refinery. Capital injection 325 • Refining capacity of 95 KBPD (+ 45%).

• Production fuels (diesel, gasoline & LPG), low sulfur content - 50 ppm Bond issuance (year 2017) 2,000 • Capable of processing heavy crude oil (domestic and imported) mixed with light crude oils. • Flexicocking unit allows deep conversion of residuals to valuable products (diesel, naphtha and Syndicated loan (CESCE guarantee) 1,300 LPG). • Conversion of low octane to high octane gasoline. Other sources (under evaluation) 695 • Capable of producing fuels with emission standard Euro VI. TOTAL (*) 4,305

Rationale (*) It does not include nor financial expenses neither additional payments to TR and Cobra Consortium. • Flexibility to use cheaper raw materials (mixture of heavy and light crude oil). • Optimization of the refining processes that will allow obtaining higher-priced products (diesel, gasoline and LPG). • Reduction of pollution derived from the production of fuels with low sulfur content.

14 PMRT Progress as of July 2019

MAIN PROCESS UNITS AUXILIARY UNITS

EPC 28.78% Engineering 100% Procurement 99.88% Construction 87.31%

Overall progress (weighted average of all units´progresses) 77.98% (July 2019)

Estimated completion date 4Q 2020

Estimated commissioning and ramp up date 2Q 2021

Estimated stabilization date 3Q / 4Q 2021

Estimated full capacity production date Jan 2022 15 Main advantages of the current refinery vs. new refinery

Key Metrics Output of the current refinery vs new refinery

Current Refinery New Refinery (PMRT) 44.3 45 (*) 40 Configuration Conversion Deep Conversion 35 30 23.3 Process Units 3 16 25 21.9 20 14.7 US$ 245 MM 15 9.4 7.9 10 6.0 Ajusted EBITDA (avrge. 2017, 2018, > US$ 700 MM KBPD 4.8 5.1 4.1 1.6 LTM 2Q2019) 5 0.4 0.5 0.5 0.0 0 US$ 4,965 MM

Revenue (avrge. 2017, 2018, US$ 5,700- 6,500 MM GLP Asfaltos

LTM2Q19) (2) Diésel

Turbo A-1 Turbo Solvente 1 Solvente

(*) Worldwide, there are only 7 deep conversion refineries with Flexicoking, of (1) Gasolinas Acido SulfuricoAcido which 1 is located in Venezuela and a new one in Perú (PMRT). Industriales Pet. Average 2005-2010 Outlook

(1) The new refinery will produce high octane and low sulfur gasolines. (< 50 ppm) Business profitability (2) The new refinery will be producing low sulfur diesel . (< 50 ppm).

• Sales price of residuals is less than crude oil Deep conversion (Flexicoking) :

• The higher proportion of residuals, the lower • Converts part of residuals in Diesel. competitiveness of the refinery • Breaks heavy moleculs of residual in a more • Heavy crude oil is cheaper and more light ones abundant, but generates more residuals

16 PMRT CAPEX

PETROPERÚ’S Capex(*) vs. PMRT’s progress CAPEX Execution as of June 2019

1400 100% 90% US$ 2,263MM 1200 80% Process units 84% 16% 1000 70% 60% US$ 352MM 800 Auxiliary units and 50% 67% complementary works 33%

MMUS$ 600 40% US$ 334MM 400 30% 20% Others 59% 41% 200 10% 0 0% US$ 2,949MM 2014 H 2015 H 2016 H 2017 H 2018 H 2019 P 2020 P Total Annual Capex (left scale) Completion (right scale) 68% 32%

(*) It does not include nor financial expenses neither additional payments to TR and Cobra Consortium.

Flexicoking Unit Process units: Main units of deep conversion (among themFlexicoking).

Auxiliary units and complementary works: Production of hydrogen, sulfuric acid, power generation unit, among others.

Others: Supervision, management and contingencies

17 CONTENT

I PETROPERÚ S.A. at a Glance

II PETROPERÚ S.A.: A Strategic Component of the Peruvian Energy Matrix

III Talara Refinery Modernization Project (PMRT)

IV Financial Performance

V Appendix

18 Financial Results (US$ MM)

Revenue & Sales Financial Debt

6,000 60 5,000 4,965 4,905 5,000 58 4,000 4,052 4,000 3,390 56 56 3,000 3,000 53 53 54 55 2,000 2,000 52 1,000 1,000 50

0 48 - 2016 2017 2018 LTM 2Q19 2016 2017 2018 2Q19 Total Revenue (US$MM) Volumen Sales (MMbbl) Short Term Debt Long Term Debt

Ajusted EBITDA & Operating Margin Equity & Solvency

377 2,000 3.50 400 347 15% 350 13% 3.00 300 11% 1,500 2.50 250 7% 219 9% 2.00 200 168 7% 1,000 1.50 150 3% 5% 500 1.00 100 4% 4% 3% 0.50 50 1% 0 -1% - - 2016 2017 2018 2Q19 2016 2017 2018 LTM 2Q19 Equity (US$MM) Total Debt/Equity Adjusted EBITDA (US$MM) Operating Margin (%) 19 CONTENT

I PETROPERÚ S.A. at a Glance

II PETROPERÚ S.A.: A Strategic Component of the Peruvian Energy Matrix

III Talara Refinery Modernization Project (PMRT)

IV Financial Performance

V Appendix

20 Investor Relations Website

• For further information you can either visiting: https://www.petroperu.com.pe/inversionistas or

• Entering into, through the PETROPERÚ S.A. Website (www.petroperu.com.pe), by clicking on Investors link:

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