By Robert Kozak
LIMA, Peru--Peru's government plans to focus on modernizing its
Talara refinery and other projects, after closing the door to a
possible purchase of assets owned by Spanish oil company Repsol SA
(REP.MC, REPYY).
Withering criticisms from the business sector led the government
on Thursday to announce that state-owned Petroleos del Peru SA
(PETROBC1.VL), or Petroperu, won't buy Repsol's La Pampilla
refinery and a chain of service stations in Peru.
Petroperu was looking at taking a minority stake in the Repsol
assets, although business groups fiercely opposed any deal, saying
the government would be taking too great a role in the economy.
"The decision was taken to not advance in this area as it wasn't
an area that would generate economic possibility for the nation,"
Prime Minister Juan Jimenez told reporters.
Energy and Mines Minister Jorge Merino said the government will
focus instead on projects currently under way, such as the upgrade
at its Talara refinery aimed at boosting production to 95,000
barrels a day from about 60,000 a day now.
Analysts said that investors will now keep a closer eye on
President Ollanta Humala's policies.
"We think investors' scrutiny over President Humala's policy
decisions will be on the rise," Credit Suisse said Friday in a
research note.
Before being elected in 2011, Mr. Humala espoused socialist
policies, but his administration has for the most part followed
market-friendly policies.
Eurasia Group said that the decision was "a positive signal that
President Ollanta Humala is sensitive to swings in investor
confidence and remains committed to the current investor-friendly
economic policy framework."
"The episode probably shows that Mr. Humala still believes in
the merit of greater state presence in the hydrocarbons sector, but
the risk of more aggressive policies will be contained by Mr.
Humala's attempt to do so through market mechanisms and his concern
over negative investor sentiment," it added.
Petroperu owns refineries, a pipeline and leases its name for a
chain of service stations.
Write to Robert Kozak at robert.kozak@dowjones.com
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