Announcement of Petroleum Production in Peru to be Assisted with Eighty-One Million Two Hundred Thousand Loan from the World Bank on August 12, 1982

' . ' FOR . IMMEDIATE .. REL'EASE: ,( · eWorldBank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.• Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 83/6 CONTACT: Sundaram Sankaran August 12, 1982 (202) 477-3962 PETROLEUM PRODUCTION IN PERU TO BE ASSISTED WITH $81.2 MILLION LOAN FROM THE WORLD BANK Peru's national petroleum company, PETROPERU, is expected to increase its petroleum production with the help of an $81.2 million loan from the World Bank. This is the third World Bank loan to help Peru maintain its position as a net petroleum exporter. An earlier loan made in 1980 is financing production rehabilitation. This 1a test 1oan wil 1 h · . . PETRor _RU increase its petroleum production by 40 million barrels over ten years. T:, will either be exported or wi'll substitute for imports, resulting in foreign exchange earnings and savings of $850 million. Another loan, approved in March 1982, is helping finance a petroleum refineries engineering project. In spite of the recent acceleration of petroleum exploration and production activities, substantial private investment is needed to insure that Peru does not become a net petroleum importer. In addition, PETROPERU, whose output has been declining for ~everal years because of limited financial resources a~d loss of technical and managerial staff, must be strengthened to play an effective role in the sector. The $241.2 million petroleum production enhancement project will drill 159 new wells and reactivate 76 old wells in the Laguna-Zapotal fields in the Talara area. Most of Peru's crude oil has come from this area on the north coast however, a considerable volume of oil can still be recovered with minimum risk and high returns. Under the project, well materials, pumping equipment, drilling services for the 235 wells, and consulting and project management services will be provided. The project management service company to be contracted wi 11 be responsi b1e for day-to-day coordination of drilling activities. The World Bank loan to PETROPERU is guaranteed ,by the Republic of Peru. It is for 17 years, including four years of grace, with interest at 11.6% per annum. It carries an annual commitment charge of 0.75% on undisbursed balances, and includes a front-end fee of 1.5% on the amount of the loan. Co-financing will be obtained partly from export credits which Bechtel's Financial Services (U.S.) is helping to arrange, and partly from commercial bank loans. PETROPERU is providing $40 million. NOTE: Money figures are expressed in U.S. dollar equivalents • •