Inspectioneering
News

Petrobras Receiving Offers for Bahia Refinery

Reuters, June 25, 2020
Reuters

Brazil’s Petroleo Brasileiro SA ("Petrobras") is set to receive binding offers for the country’s second-largest refinery on Thursday, five people with knowledge of the matter said, as the state oil company aims to restart a plan to divest more than $10 billion in assets.

If the deal for the Landulpho Alves refinery, also known as RLAM, is concluded, it would mark a first in the producer’s decade-long efforts to end its near-monopoly in refining in Brazil and open one of the top ten fuel markets in the world for private investors.

Potential bidders for the refinery in the northeastern state of Bahia include UAE investor Mubadala Investment Co PJSC and top Chinese state refiner Sinopec, the people said.

Indian conglomerate Essar Group, which has exploration operations in its home country and refining and fuel distribution assets in Britain, may also bid for RLAM, two sources said. Essar was initially interested in one of the smaller refineries expected to be sold later this year, according to the sources, that asked for anonymity to disclose private talks.

Petrobras, Mubadala and Essar declined to comment by email. Sinopec did not immediately respond to a request for comment.

Petrobras, as the producer is known, plans to sell half of its refining capacity, or eight plants, starting with RLAM, Brazil’s first fuel unit ever. Although Petrobras’ monopoly was ended by law two decades ago, the company has retained control of more than 98% of Brazil’s fuel production.

The unit has processing capacity of 323,000 barrels per day, or about 14% of Brazil’s total, and will be sold together with pipelines and terminals. The northeastern Brazilian plant, which dates from 1950, requires renovations, according to one of the sources.

As social isolation measures have been progressively eased in Brazil’s largest cities, refineries are back to operating close to their regular capacities.

Bidders had asked Petrobras for more time earlier this year, as financing became difficult and restrictions on visits due to the COVID-19 pandemic affected due-diligence work, Reuters reported.

Two other refineries in Brazil’s southern region, REFAP in Rio Grande do Sul state and REPAR in Parana state, will have deadlines for binding offers in the third quarter, which could be as soon as July, two sources added.

Some potential buyers for all three refineries have completed due diligence, two sources said, as financing for acquisitions slowly returns after a dropoff as markets cratered in the initial months of the COVID-19 pandemic.

The pandemic has squeezed the value of refineries, as drivers stayed home, reducing fuel consumption, and oil prices fell. Still, no potential bidders from an initial round of non-binding offers have so far dropped out, one of the sources said.


(Reporting by Tatiana Bautzer, Carolina Mandl, Gram Slattery, and Sabrina Valle; Editing by Matthew Lewis)

Click here to read the full article from Reuters.

Copyright 2020 Thomson Reuters. Click for restrictions.

Comments and Discussion

There are no comments yet.

Add a Comment

Please log in or register to participate in comments and discussions.


Inspectioneering Journal

Explore over 20 years of articles written by our team of subject matter experts.

Company Directory

Find relevant products, services, and technologies.

Talent Solutions

Discover job opportunities that match your skillset.

Case Studies

Learn from the experience of others in the industry.

Event Calendar

Find upcoming conferences, training sessions, online events, and more.

Industry News

Stay up-to-date with the latest inspection and asset integrity management news.

Blog

Read short articles and insights authored by industry experts.

Acronyms

Commonly used asset integrity management and inspection acronyms.

Downloads

Downloadable eBooks, Asset Intelligence Reports, checklists, white papers, and more.

Videos

Watch educational and informative videos directly related to your profession.

Expert Interviews

Inspectioneering's archive of interviews with industry subject matter experts.