Petrobras promotes sale of 60pc refinery stakes

Brazil's state-controlled Petrobras is promoting the sale of 60pc stakes in four domestic refineries, giving interested parties until 21 May to request further information on the assets.

Petrobras on 19 April unveiled a regional cluster model it will use to sell downstream assets in Brazil, starting with two groups in the northeast and south.

The northeastern group covers the Abreu e Lima refinery (RNEST), built in 2014 in Pernambuco state, and the Landulpho Alves refinery (RLAM), built in 1950 in Bahia state. The two refineries have around 430,000 b/d of combined processing capacity.

The northeastern region currently accounts for around 19pc of Petrobras' domestic capacity, but will jump to 24pc with the conclusion of a second 130,000 b/d phase at RNEST by 2021 at the earliest.

The northeastern grouping also includes two crude pipelines and 13 product pipelines covering around 770km (479 miles), and five terminals with around 5.4mn bl of fuel and LPG capacity.

The southern group covers the Presidente Getúlio Vargas refinery (Repar), built in 1977 in the southern state of Paraná, and the Alberto Pasqualini refinery (Refap), built in 1968 in Rio Grande do Sul state. The two facilities have around 416,000 b/d of combined refining capacity, around 18pc of the company's domestic total.

The group also includes two crude and seven product pipelines covering 736km, and seven terminals with around 9.5mn bl of crude, product and LPG capacity.

Petrobras will continue to hold a 40pc stake in each subsidiary established to hold the regional assets. Petrobras would continue to hold a 100pc stake in its remaining nine refineries in Brazil.

The company says the transactions will transform Brazil's fuel market and will introduce more competition into the sector Petrobras has dominated for decades. The sales would see Petrobras' share of the refining market drop to 75pc from a current 98pc.

Chinese state-owned companies are among the leading contenders for the refining assets, in addition to separate greenfield downstream projects.

Investors remain concerned that Brazil's next president, to be decided in October elections, could interfere in Petrobras' fuel pricing decisions, a situation that was common in previous leftist administrations. Petrobras executives say the decision to sell a controlling stake should offer some protection against government interference in pricing decisions.

Oil workers unions opposed to the sale plan are considering a nationwide strike. In the 1990s, the government attempted to open Brazil's downstream segment, but abandoned plans after crippling nationwide strikes.

The assets are part of the Petrobras $21bn 2017-18 divestment plan, though chief executive Pedro Parente has said the deals may only be concluded in 2019.