Petrobras fails to sell 3rd refinery

Brazil's Petrobras has pulled out of negotiations with local energy conglomerate Ultrapar for the 208,000 b/d Alberto Pasqualini refinery (REFAP), the third refinery sales process to collapse.

"Despite efforts made by both companies in this process, certain critical conditions were not successful for an agreement," state-controlled Petrobras said of talks that started earlier this year. The companies opted to end negotiations without penalty, the firm said in a securities filing.

Petrobras said it will relaunch the sales process for REFAP, located in the country's south, in a timely manner.

The refinery joins the 208,000 b/d Presidente Getulio Vargas refinery (REPAR) and the 130,000 b/d Abreu e Lima refinery (RNEST), sales of which were both suspended after failing to attract sufficient bids. The three units make up around half of the 1.1mn b/d of domestic refining capacity the firm has been trying to sell since 2019. The next steps for the RNEST and REPAR sales process are still under review, Petrobras has said.

In August, Petrobras signed a $189.5mn sales and purchase agreement with Brazilian fuel distributor Atem for the 46,000 b/d Isaac Sabba refinery (REMAN). That deal follows a $1.65bn sales agreement Abu Dhabi's state-owned investment fund Mubadala for the 333,000 b/d Landulpho Alves refinery (RLAM). Both transactions are still subject to regulatory approval.

In 2019, Brazil's anti-trust agency Cade and Petrobras reached an agreement obligating the firm to sign sales agreements for eight refineries by the end of 2020 and close all agreements by 2021. Already revised multiple times, the agreement is expected to be amended by year-end.

Other refineries in Petrobras' downstream divestment portfolio are due to close by year-end, including 30 October for the 6,000 b/d SIX shale processing unit, the 8,000 b/d Lubnor refinery and the 166,000 b/d Gabriel Passos refinery (REGAP). REPAR is still scheduled to be sold on 31 December.

The refinery sales are part of Petrobras' $25bn-$35bn 2021-25 asset disposal campaign.

The company's downstream divestment plan has been battered by a worsening domestic fuel price crisis that has revived concerns of government meddling in the company's decision making. Petrobras incurred massive downstream losses from government-capped prices through 2014, a situation that chilled investment in the segment.

Petrobras' chief executive Joaquim Silva e Luna has repeatedly assured investors that the firm remains committed to the import price parity that governs its market-based fuel pricing policy. The executive's assurances follow recent rumblings from Brazilian president Jair

Bolsonaro over spiraling fuel prices.