Petrobras to miss Dec deadline for refinery sales

Brazil's state-controlled Petrobras will miss a December deadline to reach sales agreements for eight of its refineries, mainly because bids for three of them were too low, chief executive Joaquim Silva e Luna told a senate committee today.

Summoned by the economic affairs commission to address rising fuel prices, Silva e Luna deflected blame from the company's import parity framework that ties local prices to international ones. The hearing is taking place as lawmakers consider a proposed fuel price stabilization fund that could be financed by a new tax on oil exports. Yes

Petrobras refinery sales were initially delayed by the Covid-19 pandemic but have more recently become entangled in the politics of fuel pricing. Petrobras has defended the ambitious plan to sell around half of its 2.2mn b/d of capacity as the only way to inject more competition in a downstream market it has dominated for years.

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, a deadline for late 2022 is expected to be announced by year-end.

Silva e Luna said Petrobras shelved sales processes for the 208,000 b/d Alberto Pasqualini refinery (REFAP) refinery, the 208,000 b/d Presidente Getulio Vargas refinery (REPAR) and the 130,000 b/d Abreu e Lima refinery (RNEST) because bids were considered too low. The company has yet to announce a new strategy for selling the units and has said in the past it could retain them.

The company has so far only signed sales agreements for three refineries, the most recent a $33mn deal with Canadian bank Forbes & Manhattan for the 6,000 b/d SIX facility. 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 with Abu Dhabi's state-owned investment fund Mubadala for the 333,000 b/d Landulpho Alves refinery (RLAM). None of the deals have closed.

By Nathan Walters