© Reuters. FILE PHOTO: Normal view of Petrobras Paulinia refinery in Paulinia, Brazil July 1, 2017. REUTERS/Paulo Whitaker/File Photograph
By Tatiana Bautzer, Rodrigo Viga Gaier and Carolina Mandl
SAO PAULO/ RIO DE JANEIRO (Reuters) – Brazil’s state-controlled oil firm Petrobras has raised costs not less than as soon as in the course of the divestiture means of its largest refineries, irritating some bidders and delaying the lengthy awaited promise of breaking Petrobras’ monopoly in refining, 4 sources with data of the matter instructed Reuters.
Bidders have been stunned by what they describe as last-minute modifications within the divestiture course of demanded by Petroleo Brasileiro SA, as the corporate is formally recognized, the sources added, asking for anonymity to reveal personal discussions with Brazil’s largest state-run firm.
Petrobras, which used to manage nearly 100% of refining in Brazil, has dedicated to scale back its capability by 50% promoting eight of its 13 refineries after a deal in June 2019 with antitrust watchdog CADE to introduce competitors in gas pricing. However to date it bought solely three and a discount in political pressures to artificially set gas costs appears distant.
The sources stated pricing modifications, along with a paucity of purchaser curiosity partially fueled by stress from traders fearful about ESG targets in opposition to shopping for fossil gas property, have plagued the sale of not less than two of Petrobras’ largest refineries on sale, REFAP and REPAR.
Petrobras has but to restart the sale means of REFAP and REPAR, which have capacities of 201,280 barrels per day and 207,563 bpd respectively, producing 17.8% of Brazil’s gas output, in keeping with oil regulator ANP knowledge.
In July, Cade prolonged a deadline for Petrobras to promote the eight refineries it had dedicated to divest to Dec. 31, however Petrobras has publicly admitted the deadline won’t be met.
On Nov. 30, Chief Monetary Officer Rodrigo Araujo stated Petrobras was unlikely to promote REPAR and REFAR earlier than the October 2022 presidential elections.
In a press release to Reuters, Petrobras stated it’s “totally dedicated” to the sale of all eight of the refineries included within the settlement with Cade.
Petrobras will strive once more to promote three refineries that had their processes canceled, REFAP,REPAR and RNEST.
The corporate is continuing with the divestitures of LUBNOR, a 8,000-bpd refinery within the northeastern area that produces solely asphalt and lubricants, and 150,00-bpd REGAP, positioned within the state of Minas Gerais, representing 7.1% of complete refining capability.
Brazilian conglomerate Ultrapar Participacoes had been in talks with Petrobras since January to amass the REFAP refinery, which accounts for 7.7% of complete Brazilian refining capability and is positioned within the southern state of Rio Grande do Sul.
However for the reason that starting of the talks, Petrobras had been attempting to get the next worth, and in September, it determined to ask for the next bid, two sources with data of the matter stated. Ultrapar representatives, who thought they’d already secured a worth and have been discussing contract particulars, rejected the request and left the talks.
Petrobras introduced the talks failure on Oct.1.
Ultrapar declined to touch upon the matter. Petrobras declined to touch upon particularly asking for the next worth for REFAP.
One thing totally different occurred with REPAR, a refinery positioned within the southern state of Parana that concentrates 10.1% of Brazil’s refining capability, in keeping with ANP knowledge.
Raizen, a three way partnership of Royal Dutch Shell (LON:) and Brazilian power firm Cosan (NYSE:), had expressed curiosity within the asset. Raizen delivered a bid above the initially set minimal worth, however Petrobras then raised the value and rejected the bid as too low.
Raizen declined to lift its provide, no different bidders emerged and in February, Petrobras stated in a press release it could not promote REPAR because it thought-about bids too low. Raizen declined to remark.
“There was no rule change throughout the sale course of,” Petrobras stated in a response to Reuters questions in regards to the mater.
However a fifth supply acquainted with the divestiture stated “totally different variables outline the value and they’re normally up to date”. Since Petrobras launched the refineries sale course of greater than two years in the past, world benchmark has soared about $10 to $73 on Tuesday.
Negotiations for REGAP additionally look like stalled. Petrobras requested for non-binding provides that have been delivered in November 2019.
A minimum of one bidder, personal fairness agency EIG International Vitality Companions, delivered a bid, however negotiations didn’t progress, in keeping with a sixth particular person with data of the matter. EIG declined to touch upon the matter.
Up to now, Petrobras has bought three refineries. The most important one is RLAM refinery, within the northeastern state of Bahia with 330,000 bpd capability, which represents 14% of Brazilian refining capability, to United Arab Emirates investor Mubadala Funding Co for $1.8 billion.
Different very small refineries within the northern area have been additionally bought: 46,000 bpd REMAN to Brazilian regional group Atem and 6,000-bpd SIX to Forbes & Manhattan Assets.
However the property bought to date are inadequate to affect costs within the home gas market.
Because the asset gross sales drag on, demand for refineries is dwindling. A number of of them fetched a single provide and there was no-one inquisitive about RNEST, within the northeastern state of Pernambuco.
After the failure of the sale, Petrobras introduced that may put money into the 115,000-bpd RNEST refinery and lift its capability to 260,000 bpd in 2027.