Peruvian oil company Petroperú is negotiating to finalize a long-term loan guarantee from the Italian export credit agency Servizi Assicurativi del Commercio Estero (SACE) for up to $500 million for the Talara oil refinery in Peru.
If the Italian agency SACE and Petroperú broker a deal for this loan coverage, Italy would be complicit in putting the rights of the Wampís Nation and the Achuar Nation peoples at great risk, as their autonomous governments have not provided consent via a Free, Prior, and Informed Consent process with Petroperú, as required by international human rights standards and Peruvian law. Italy would also assume significant financial risk and be going against its climate commitments, as a signatory of the Glasgow Climate Pact that committed to end international public financing for fossil fuels by the end of 2022.
Teofilo Kukush, President of the Wampís Nation issued the following statement about the negotiations between SACE and Petroperú:
“We have learned that SACE is considering supporting Petroperú, based on information the oil company sent it, regarding Petroperú’s climate and environmental promises. We tell SACE, just as we have asked all of Petroperú’s investors, to complete its due diligence and respond to our request to discuss the risks. They must understand why we consider that support for a company like Petroperú includes risks to the lives of our sons and daughters, our people, and the climate crisis in ways that will affect us all, which we simply cannot accept.”
Background
In September 2022, Amazon Watch published the report, The Risks of Investing in Petroperú, assessing possible risks investors may have by investing in the state-owned oil company Petroperú. Petroperú plunged into severe debt and financial instability after amassing $5.3 billion in loans and bonds to finance the Talara Refinery Modernization Project (which Petroperú refers to as PMRT).
The company fuels a public narrative that the only way Petroperú can fully operate this refinery and pay back its massive debt will be to ramp up oil extraction from concessions that overlap with Indigenous territories, which would violate rights established in national and international legislation, and put in danger the Amazonian territories that are crucial to halting the worse of the climate crisis. Therefore, we consider operating the refinery unfeasible.
Petroperú’s most recent financial statement indicates that it seeks another $500 million long-term loan for the financial close of the PMRT, with a possible guarantee from SACE.
Financial institutions considering extending or establishing new client relationships with Petroperú face severe financial risk stemming from years of mismanagement, unfulfilled promises, and a dense layer of social tensions with Indigenous communities.
Amazon Watch shared this report with current financiers and investors, including BBVA, HSBC, Deutsche Bank, BNP Paribas, Santander, JPMorgan Chase, Bank of America, Goldman Sachs, Citibank, and asset management firms like Vanguard. BNP and Deutsche Bank publicly expressed concern about the findings of the report. Their complete responses can be found here.
