PetroTal to boost PetroPeru spot crude sales

Canadian independent PetroTal plans to supply state-owned PetroPeru with another 1.5mn bl of medium sweet crude to sell on the spot market in the coming six months.

PetroPeru sold its first shipment of 460,000 bl acquired from PetroTal's block 95 in mid-July. The cargo was purchased by BP at a $1.39/bl discount to Ice Brent.

"I am very happy with PetroPeru. They did a great job selling the oil," PetroTal chief executive Manuel Zuñiga told Argus on 3 August. "It was an amazing price for us, reflecting the quality of our product."

The company's 19°API, 0.5pc sulfur Bretaña crude has almost no heavy metals, Zuñiga said. The production cost is around $25/bl, which includes transportation and blending to make sure viscosity is below the maximum 650 centistokes required to flow through PetroPeru's 100,000 b/d northern crude pipeline.

The two companies signed an agreement last year for PetroPeru to acquire production from the 40mn bl block, which is located in Peru's northern jungle.

Once PetroPeru reopens its Talara refinery in late 2021 following an extensive upgrade, the company is expected to process Bretaña itself, rather than export it.

Zuñiga said he approached PetroPeru about the deal after reaching out to various traders.

"We asked PetroPeru if they wanted an agreement like what traders were offering us and they jumped at the opportunity," he said.

He described how plans were advancing until March, when oil prices crashed and the pandemic abruptly gutted demand. Then PetroPeru closed the pipeline because there was not enough production in the northern jungle to keep it running.

PetroTal restarted production in mid-July in anticipation of PetroPeru's reopening of the pipeline. Until then, PetroTal transported its crude by barge to the first pumping station along the 1,110 (684mi) pipeline. The transport takes between six and eight months from wellhead to the end of the pipeline at the port of Bayovar.

Brief restart

PetroPeru's pipeline restart on 1 August proved short-lived. Residents near one of the pumping stations occupied the installations the next day, forcing another suspension in operations.

Zuñiga said the block could reach 11,400 b/d through December if PetroPeru keeps the pipeline open.

By Lucien Chauvin