The case of Petroperú well illustrates the difficulties inherent in setting up a model in which development is led by an autonomous and efficient state enterprise sector linking effectively with international technology and the world market. The difficulties in the Peruvian case were essentially political and managerial, although Petroperú suffered to some considerable extent from the vagaries of Peruvian geotogy. One conclusion may be that, whereas state enterprise is a feasible solution in countries where oil reserves are known to be abundant (Mexico) or where the domestic market is more important than domestic oil production (Brazil), state oil companies are not equipped to take major risks unless these are restricted to a minor part of their overall activity. Even more central is the fact that the creation of a successful state oil company is a difficult matter which requires a considerable degree of political as well as technical sophistication. Problems of economic policymaking do not disappear when foreign companies are nationalised.

The early politics of Petroperú 1969–71

After the expropriation of ipc in 1968–9 by the incoming military government, the state company Petróleos del Perú (Petroperú) appeared to have a considerable number of initial advantages. These stemmed from several different factors. One of the most important of these was the enormous amount of emotional capital invested in Petroperú. During the whole course of the debate on IPC, a main argument used by the opponents of nationalisation was the incompetence of state enterprise in Latin America.