Paprika began life as a 1993 novel (serialised in Marie Claire!) by Satoshi Kon. It was adapted as a manga in 2003, the full-length anime in 2006, and a different manga in 2007.
The plot, which sounds a better fit for David Cronenberg than Petersen, sees a doctor illegally using a new psychotherapy treatment called the "DC Mini", to manipulate her patients' dreams from the inside. When one of the few existing prototype machines is stolen, dreams and the real world eventually collide. There are living nightmares, people turning into one another, a weird circus parade, a people-eating robot and a giant doll.
In a word, it's mental, so it's a curious prospect for a director whose recent work has been straight-down-the-line fare like Poseidon and Troy.
There's no indication so far though of whether Petersen is planning animation or live action, or even if he intends to direct or just produce. In the meantime he'll be wrestling with the alien revolution movie Uprising.