Petrobras puts eight refineries up for sale

30 April 2019, Week 17, Issue 761

Petrobras has put eight refineries up for sale along with a stake in its distribution arm and a chain of service stations in Uruguay.

The state-run Brazilian company said the eight refineries it is selling have a combined refining capacity of 1.1 million bpd and include the Abreu e Lima refinery near Recife in the northeast of Brazil. The company said in a statement the sales were as a result of "new guidelines for the management of its asset portfolio" approved by its board of directors. 

The decision to sell the refineries follows recent statements by CEO Roberto Castello Branco who has said the company should pare back its 98% refining monopoly in Brazil. "We are going to sell not just to allocate resources, but also to remove any temptation to exercise the power of monopoly," he said in March. 

Abreu e Lima was sucked into a corruption scandal after inflated costs at the refinery were uncovered as part of the Operation Car Wash graft investigation. 

Announced as a partnership between Petrobras and Venezuela’s PDVSA when Worker’s Party (PT) former president Luiz Inacio Lula da Silva ran Brazil and Hugo Chavez was in charge in Venezuela, Abreu e Lima, also known as RNEST, originally had an estimated price tag of US$2.4 billion. That figure had surged to US$13.4 billion in 2009 and by 2016, with only one refinery train finished, the cost had soared to US$17.8 billion. The G1 news site reported at the time that completing the whole complex would cost a staggering US$18.9 billion. 

Petrobras said the other downstream assets up for sale include: Unidade de Industrializacao do Xisto (SIX), Refinaria Landulpho Alves (RLAM), Refinaria Gabriel Passos (REGAP), Refinaria Presidente Getulio Vargas (REPAR), Refinaria Alberto Pasqualini (REFAP), Refinaria Isaac Sabba (REMAN) and Lubrificantes e Derivados de Petroleo do Nordeste (LUBNOR). 

The company noted that Brazil’s anti-trust agency, the Administrative Council for Economic Defence (CADE), had recommended the asset sales. In December CADE opened an investigation into whether Petrobras abuses its dominance of the refining sector and criticised plans last year to sell 60% of four refineries, two in the northeast of Brazil and another two in the south, rather than all of them. 

"The refineries’ divestment projects, in addition to repositioning the company’s portfolio to higher-yielding assets, will also allow for the increase in competitiveness and transparency of the downstream business in Brazil, in line with the National Petroleum Agency (ANP) position and recommendations of CADE," Petrobras said. 

The company is also looking to sell 100% of its PUDSA network of service stations in Uruguay and an extra stake in its distribution arm, BR Distribuidora. Petrobras currently owns 71% of the subsidiary after an IPO in 2017. 

On April 25, Petrobras announced it had raised US$10.3 billion via other asset sales. It sold 90% of its TAG natural gas transport operation to a group made up of Engie and Canadian fund CDPQ for US$8.6 billion. 

Half of its E&P rights in the Tartaruga Verde field and the nearby Modulo III went to Malaysia’s Petronas for US$1.29 billion. And all of its share in 34 onshore fields in the northeast state of Rio Grande do Norte were bought by Potiguar, a subsidiary of Petroreconcavo, for US$384.2 million. 

Edited by

Ryan Stevenson

Managing Editor

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