Petrobras refinery sale clears regulatory hurdle

Brazil's state-controlled Petrobras edged closer to selling its first refinery following regulatory approval of a $1.65bn deal with Abu Dhabi's state-owned investment fund Mubadala.

Anti-trust watchdog Cade approved the agreement to sell the 333,000 b/d Landulpho Alves refinery (RLAM), the first of eight that Petrobras is under pressure to sell. The transaction is still subject to a 15-day review period and other conditions set forth in the purchase and sale agreement, Petrobras said late yesterday.

The company and Mubadala entered exclusive negotiations for the refinery in the northeastern state of Bahia in July 2020.

The extended negotiation and regulatory sales process is renewing concerns that Petrobras will not close the sales of the seven other domestic refineries by year-end. In 2019, Petrobras agreed with Cade to sell the eight refineries — which have around 1mn b/d of installed capacity — by the end of 2021.

An original commitment to have agreements signed by the end of 2020 has been revised multiple times, partly because of delays related to the Covid-19 pandemic.

In April, Cade approved 31 July as the new deadline for the signing of sales agreements for the 208,000 b/d Alberto Pasqualini refinery (REFAP), 46,000 b/d Isaac Sabba refinery (REMAN), and the 8,000 b/d Lubnor refinery; 30 October for the 6,000 b/d SIX shale processing unit, 166,000 b/d Gabriel Passos refinery (REGAP), and 130,000 b/d Abreu e Lima refinery (RNEST); and 31 December for the 208,000 b/d Presidente Getulio Vargas refinery (REPAR).

Cade has not adjusted the 31 December 2021 closing deadline for the seven refineries, even though RLAM is the only sales and purchase agreement signed so far. The deal was subjected to multiple legal challenges launched by oil workers' unions opposed to the refinery sales, a tactic likely to be repeated for the other downstream deals.

Since late January, Petrobras and Brazilian energy conglomerate Ultrapar have been in exclusive talks for the 208,000 b/d Alberto Pasqualini refinery (REFAP) in the southern state of Rio Grande do Sul.

Refinery sales make up the bulk of Petrobras' $25bn-$35bn 2021-25 divestment plan, which is aimed at reducing the company's heavy debt load.

The ambitious refinery sales plan was jolted early this year by a controversial management overhaul at Petrobras that initially spooked investors worried about political interference in fuel pricing. Since taking the reins in mid-April, the company's new chief executive, former army general Joaquim Silva e Luna, has sought to reassure investors that the company plans to stick to import price parity in place since 2016.

By Nathan Walters