Petrobras suspends refinery sales

Brazil's state-controlled Petrobras has postponed the receipt of binding offers for its domestic refineries as the oil price crash and coronavirus drastically alter market conditions.

Company executives had said initial sales agreements for some of the refineries could be announced as early as April. The company did not say when the process would resume.

The downstream divestment portfolio covered eight refining units with around 1.1mn b/d of installed capacity, most located in the south and north of Brazil.

Fuel distributor Ipiranga, a subsidiary of Brazilian conglomerate Ultrapar, and Raizen, a joint venture between Brazil's Cosan and Shell, are among the firms evaluating the assets. China's state-owned Sinopec has also been evaluating refinery projects in Brazil.

Brazil's anti-trust watchdog Cade had obligated Petrobras to divest downstream assets by the end of 2021 to increase competition in the sector. It was not clear if that deadline would also be extended.

The eight refineries and connected logistics were a large part of the $20bn-$30bn Petrobras planned to raise from non-core assets sales in 2020-24, according to its $75.7bn five-year spending plan.

The company has now requested that lenders disburse around $8bn from revolving credit lines to boost liquidity while it evaluates other measures that reinforce its cash flow, including cost reductions and optimization of working capital.

A 22 April shareholder meeting has been convened at the company's Rio headquarters to consider 2020 capital spending, among other matters.

Earlier this week, Petrobras extended a deadline for expressions of interest for its 51pc stake in gas distribution subsidiary Gaspetro by 30 days. Upstream sales processes—including the divestment of stakes in the Pelotas and Espirito Santos basins—have yet to be affected.

Yesterday Petrobras announced it would cut staff at offshore production platforms to a minimum.

By Nathan Walters