Peru will sign a letter of intent with Ecuador next week for an $800 million oil pipeline connection, Petroleos del Peru SA Chief Executive Officer Luis Rebolledo said.
The state-owned oil producer known as Petroperu aims to carry excess crude to the northern port of Bayovar from PetroEcuador SA’s southern Amazon jungle fields, Rebolledo said today in an interview in Lima. The crude will go through Peru’s three-quarters empty 200,000 barrel-a-day pipeline, he said.
“It’s a very important project,” Rebolledo said. “Ecuador’s President Rafael Correa will sign the accord at the Organization of American States meeting in Lima.”
Ecuador and Peru are trying to boost production of oil as declining revenue crimps government finances. Petroperu may sell bonds next year to finance a $1.3 billion expansion of its biggest refinery, Talara, Rebolledo said.
The Organization of American States, a political organization with 35 member nations, will hold its general assembly in Lima June 6-8.
Last year, Spain’s Tecnicas Reunidas SA won a contract from Petroperu to expand the Talara refinery by 50 percent to 90,000 barrels a day by 2016. The expansion will enable the plant to refine oil from fields in Peru’s northern jungle operated by Spain’s Repsol YPF SA and Perenco SA.
Crude-oil futures for July delivery rose 55 cents to $73.41 a barrel at 2:04 p.m. on the New York Mercantile Exchange. Prices have dropped 11 percent this year.