Petróleos Del Perú – PETROPERÚ SA
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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 Peru (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) Lima 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 Board the Chairman Vice of Hernán Barros Summary Barros Hernan Cruchaga • 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 Piura (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 Iquitos • 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 Chiclayo Tarapoto Nor Peruano 01 is operated by a third party(2). Oil Pipeline Salav erry/ Pucallpa(2) Trujillo • Port Terminals(3): 11 (8 are operated by third parties). Airport Plants Chimbote 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 Callao Conchán Urubamba and Camisea); 01 occasional (Aquila). Cuzco Sales Plants or Terminals Owned and Operated by Pisco Arequipa Juliaca • 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 Tacna 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