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Brazil’s Petrobras higher price demands delay refineries sales- sources


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Reuters

Tatiana Bautzer and Rodrigo Viga Gaier and Carolina Mandl

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SAO PAULO/ RIO DE JANEIRO — Brazil’s state-controlled oil firm Petrobras has raised costs at the very least as soon as in the midst of the divestiture technique 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 informed 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 identified, the sources added, asking for anonymity to reveal non-public discussions with Brazil’s largest state-run firm.

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Petrobras, which used to manage nearly 100% of refining in Brazil, has dedicated to cut 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 gasoline pricing. But thus far it offered solely three and a discount in political pressures to artificially set gasoline costs appears distant.

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The sources stated pricing modifications, along with a paucity of purchaser curiosity partially fueled by strain from traders anxious about ESG targets in opposition to shopping for fossil gasoline property, have plagued the sale of at the very least two of Petrobras’ largest refineries on sale, REFAP and REPAR.

Petrobras has but to restart the sale technique of REFAP and REPAR, which have capacities of 201,280 barrels per day and 207,563 bpd respectively, producing 17.8% of Brazil’s gasoline output, in keeping with oil regulator ANP knowledge.

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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.

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On Nov. 30, Chief Financial 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 “fully committed” 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 firm 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, situated within the state of Minas Gerais, representing 7.1% of complete refining capability.

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TALKS BREAKDOWN

Brazilian conglomerate Ultrapar Participacoes had been in talks with Petrobras since January to accumulate the REFAP refinery, which accounts for 7.7% of complete Brazilian refining capability and is situated within the southern state of Rio Grande do Sul.

But because the starting of the talks, Petrobras had been making an attempt to get a higher price, and in September, it determined to ask for a higher bid, two sources with data of the matter stated. Ultrapar representatives, who thought that they had already secured a price 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 a higher price for REFAP.

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Something completely different occurred with REPAR, a refinery situated 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 and Brazilian power firm Cosan, had expressed curiosity within the asset. Raizen delivered a bid above the initially set minimal price, however Petrobras then raised the price and rejected the bid as too low.

Raizen declined to lift its supply, no different bidders emerged and in February, Petrobras stated in a press release it will not promote REPAR because it thought of bids too low. Raizen declined to remark.

“There was no rule change during the sale process,” Petrobras stated in a response to Reuters questions in regards to the mater.

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But a fifth supply acquainted with the divestiture stated “different variables define the price and they are usually updated.” Since Petrobras launched the refineries sale course of greater than two years in the past, international benchmark Brent crude has soared about $10 to $73 on Tuesday.

Negotiations for REGAP additionally look like stalled. Petrobras requested for non-binding gives that have been delivered in November 2019.

At least one bidder, non-public fairness agency EIG Global Energy Partners, delivered a bid, however negotiations didn’t progress, in keeping with a sixth individual with data of the matter. EIG declined to touch upon the matter.

SLOW DIVESTITURE

So far, Petrobras has offered three refineries. The largest 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 Investment Co for $1.8 billion.

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Other very small refineries within the northern area have been additionally offered: 46,000 bpd REMAN to Brazilian regional group Atem and 6,000-bpd SIX to Forbes & Manhattan Resources.

But the property offered thus far are inadequate to affect costs within the home gasoline market.

As the asset gross sales drag on, demand for refineries is dwindling. Several of them fetched a single supply and there was no-one desirous about RNEST, within the northeastern state of Pernambuco.

After the failure of the sale, Petrobras introduced that can put money into the 115,000-bpd RNEST refinery and lift its capability to 260,000 bpd in 2027. (Reporting by Tatiana Bautzer, Rodrigo Viga Gaier and Carolina Mandl in Sao Paulo and Rio de Janeiro Editing by Marguerita Choy)

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