Brazil's state-controlled Petrobras plans to operate the 333,000 b/d Landulpho Alves refinery (RLAM) for 15 months after it is sold to Abu Dhabi's state-owned investment fund Mubadala in the third quarter.
The two companies are finalizing the $1.65bn refinery sale close to a year after starting exclusive negotiations for the asset in the midst of oil market uncertainty wrought by the Covid-19 pandemic.
Brazil's anti-trust regulator Cade approved the landmark transaction earlier this month.
RLAM is the first refinery sale in Petrobras' downstream divestment portfolio, representing half of its total 2.2mn b/d of domestic processing capacity.
In a congressional committee hearing on 25 June, Petrobras chief executive Joaquim Silva e Luna said Mubadala has offered to purchase Brazilian crude as feedstock for the northeastern refinery. Short-term service and supply contracts are likely for the seven other refineries Petrobras plans to sell by the end of the year, company executives have told Argus. But with other domestic crude suppliers such as Shell and Galp in the market, Petrobras will have more crude available for export in the coming years.
Petrobras expects its 2021-25 crude export portfolio to climb to 891,000 b/d from around 445,000 b/d in 2015-19, reflecting rising pre-salt production and the downstream divestments.
Pricing reassurance
Despite repeated court defeats, oil industry labor unions and opposition politicians continue to challenge the RLAM price tag as too low. Unions represented by federal group FUP have redoubled efforts to block the refinery sales, and pressure Petrobras to abandon market-based fuel pricing, which underpins the economics of the refinery sales. Such pressure is likely to increase as Brazil approaches elections later next year.
In last week's hearing, Silva e Luna repeated his assurance that the company does not intend to abandon import price parity, noting the country's continued dependency on fuel imports. When nominated by President Jair Bolsonaro in mid-February, investors feared Brasilia was meddling to derail the pricing policy, a claim Silva e Luna dismissed.
The former army general and one-time defense minister said refinery sales, part of the company's $25bn-$35bn divestment portfolio, will help finance pre-salt oil production and exploration campaigns in frontier basins in northern Brazil.
