Petrobras delays refinery sales, again

Brazil's state-controlled Petrobras has pushed back another deadline to sell its refineries, renewing questions over whether its ambitious downstream divestment plans can overcome political and commercial challenges.

The sales are critical to reducing the company's debt and underwriting a strategic focus on pre-salt crude development.

Under a revised deadline set by anti-trust agency Cade in April, Petrobras was obligated to sign sales agreements by 31 July for the 208,000 b/d Alberto Pasqualini refinery (REFAP), the 46,000 b/d Isaac Sabba refinery (REMAN) and the 8,000 b/d Lubnor refinery. The company now has until 31 August to sign an agreement for REMAN, and 30 October for REFAP and Lubnor.

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) are also scheduled to have agreements signed by 30 October, and the 208,000 b/d Presidente Getulio Vargas refinery (REPAR) by 31 December.

Petrobras has so far reached only one refinery deal. In July 2020, Abu Dhabi investment fund Mubadala agreed to pay $1.65bn for the 333,000 b/d Landulpho Alves refinery (RLAM). The acquisition is scheduled to close by the end of September, more than a year after exclusive talks started. Labor unions and other critics say the sale price for the asset is below market, an assertion denied by Petrobras.

The company has been in exclusive talks with Brazilian energy conglomerate Ultrapar for REFAP since January, and describes investor interest in REMAN and Lubnor as strong.

Petrobras is still defining a sales strategy for REPAR, which failed to produce offers above the minimum set by the firm after two rounds of bidding in 2020. The company has said it could retain assets that fail to attract satisfactory bids.

In 2019, Petrobras and Cade signed an agreement that set 31 December 2020 as the deadline for the signing of sales agreements and 31 December 2021 as the deadline for all to close. The latter deadline remains in place.

The Covid-19 pandemic contributed to delays in the refinery sales process, as have persistent concerns about long-term global fuel demand at a time of energy transition. Petrobras' recent managerial overhaul and suggestions of political meddling to check fuel prices have also spooked investors.

By Nathan Walters