Petropar still trying to attract foreign investment.

Paraguayan Petroleums (Petropar) is the Paraguayan national oil company engaged in the commercialisation of biofuels and hydrocarbons. It has a monopoly on all oil product sales and imports in Paraguay and operates the country’s only refinery. Paraguay does not currently produce oil and has no proven natural gas reserves.

Foreign investors have been circling Petropar for many years but they have never taken the plunge by committing serious capital. Most recently, investors from the US, Panama and Ecuador have been considering investment to promote oil and exploration, expand sugarcane alcohol production and reactivate the Villa Elisa refinery and the terminal that the company owns in Zárate, Argentina.

A senior Asuncion-based trade lawyer explained, “For the last two or three years, the government has been trying to attract foreign investors into Petropar. There are always rumours, Canadian, US, Panamanian and Brazilian investors have reportedly shown interested in investing in Petropar but, at the end of the day, we only see collaboration agreements. I’m not saying those are not useful, it does bring some benefit to Petropar’s know-how, but there’s no real money in them.”

“For the last two or three years, the government has been trying to attract foreign investors into Petropar. […] but, at the end of the day, we only see collaboration agreements.”

Senior, Asuncion-based trade lawyer

The Ministry of Foreign Affairs of Paraguay released news last month that Enrique Jara Ocampos, the Ambassador of Paraguay in Panama had held talks with the president of Petropar, Denis Lechi, in which they discussed the investment opportunities by international investors with offices in Panama, to carry out projects in Paraguay in a strategic partnership with Petropar.

A local expert in oil and gas trade was sceptical that anything would come of it, “I wouldn’t be surprised to see foreign investors failing to materialise their reported investments in the company. The case of [Patricia] Samudio [former Petropar president who resigned in April 2020 after corruption allegations in the acquisition of face masks] evidences that even the smaller tenders can be rigged.”

The lawyer agreed that corruption was a concern, “Corruption in Paraguay is a problem and Petropar is not alien to the country’s weaknesses.”

“Corruption in Paraguay is a problem and Petropar is not alien to the country’s weaknesses.”

Senior, Asuncion-based trade lawyer

Petropar has also been embroiled in a scandal and law suit over an irregular agreement with a small Argentine firm, Texos SRL, for the supply of diesel. An executive with knowledge of the matter outlined, “The Texos Oil affair [a court ruling prevented Petropar from paying USD 7 million in compensation to the Argentinean Texos Oil which claimed USD 31 million in prejudices] is not helping either. Firstly, who gave this low-profile company green light to partner with Petropar? Secondly, why would someone at Petropar settle a USD 7 million payment instead of going to court and fighting for its money? Thirdly, how come can Deni Lichi (President of Petropar) continue to be in place after having failed to control this deal?”

Perhaps there is good reason why foreign investors repeatedly back away.

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