Petróleo Brasileiro SA (Petrobras) is moving forward with the proposed completion and expansion of a second processing train at the operator’s original nameplate-capacity 130,000-b/d Refinaria Abreu e Lima (RNEST) refinery in Ipojuca, Pernambuco, in northeast Brazil.
Sanctioned by the company’s board at a June 28 meeting following the reassessment and confirmation of the project’s economic attractiveness, the approval will allow Petrobras to resume implementation of its previously stalled RNEST’s Train 2, work on which was interrupted in 2015, the company said on June 29.
Already foreseen within anticipated capital expenditures outlined by the company’s 2023-27 strategic plan, Petrobras said revival of the RNEST Train 2 project—which is scheduled to begin operating in 2027—will contribute to expanding Brazil’s domestic refining capacity to enable increased production of finished petroleum products to meet market demand, especially for Diesel S10.
Contract awards associated with continuity of work on RNEST's Train 2 will undergo all necessary analyses, in compliance with applicable governance practices and internal procedures, and will be disclosed to the market in due course, the operator said.
RNEST’s Train 2 has the potential to double the refinery’s capacity to 260,000 b/d with startup of the second 130,000-b/d processing train, according to an August 2022 Petrobras informational on RNEST operations.
RNEST’s ongoing modernization
Confirmation of the project follows Petrobras’s April contract award to an unidentified service provider for works to improve operations of existing RNEST Train 1’s atmospheric distillation unit, delayed coker, and other unidentified auxiliary units that, together, will return Train 1’s total crude oil processing capacity to 130,000 b/d from a current 115,000 b/d (OGJ Online, Apr. 23, 2023).
Scheduled for completion during fourth-quarter 2024, Train 1’s proposed modernization also will enable Petrobras to increase its supply of 100% low-sulfur Diesel S10 for the Brazilian market beginning in 2025.
In addition to reducing emissions of particulate matter, use of Diesel S10—which has a higher cetane number than Diesel S500 (500 ppm sulfur)—promotes improved fuel performance of vehicle engines in line with Brazil’s stricter air pollution control program for on-road heavy-duty and utility vehicles (OGJ Online, June 15, 2022).
Planned modernization of RNEST Train 1 and the newly approved Train 2 project follow the operator’s August 2022 restart of the nonbinding phase in its program to sell three of its Brazilian refineries and associated logistics assets, the sales of which were previously delayed to accommodate revisions to divestment plans for each of the sites that, alongside RNEST, include the 208,000-b/d Refinaria Presidente Getulio Vargas (REPAR) refinery; and 208,000-b/d Refinaria Alberto Pasqualini (REFAP) refinery (OGJ Online, Aug. 22, 2022).
Petrobras said upon initially delaying the sales process in August 2021 that it would evaluate next steps regarding RNEST’s future after completing internal procedures to end the refinery’s then-current sale process (OGJ Online, Aug. 26, 2021).
With a rated crude processing capacity of 88,000 b/d as of yearend 2022, RNEST’s average throughputs—including crude and NGL feedstock—have decreased to 61,000 b/d in 2022 from 93,000 b/d, according to Petrobras’ latest annual report to investors.
Downstream divestment update
Petrobras separately confirmed on June 22 that it has also received final approval from federal regulators on the operator’s previously signed but delayed contract for the sale of its 10,400-b/d Lubrificantes e Derivados de Petróleo do Nordeste (LUBNOR) refinery in Fortaleza, Ceará, Brazil (OGJ Online, Dec. 1, 2022).
The court of Brazilian regulators the Administrative Council for Economic Defense (CADE) has approved the transaction for LUBNOR’s sale to Grepar Participações Ltda.—jointly owned by Grecor Investimentos em Participações Societárias Ltda., Greca Distribuidora de Asfaltos Ltda. and Holding GV Participações SA—through the signing of an agreement in concentration control, with other outstanding but unidentified precedent conditions to be met as part of the process, Petrobras said.
Approval of the LUBNOR transaction follows CADE’s deferral of the sale earlier this year after a request by councilors requesting additional time to reveal the divestment (OGJ Online, Feb. 9, 2023).
As part of the original May 2022 deal, Grepar Participações agreed to acquire Petrobras’s ownership interest the LUBNOR refinery and associated logistics assets for an overall purchase price of $34 million, $3.4 million of which was paid as a guarantee at the contract signing, with $9.6 million to be paid upon closing of the transaction, and the remaining $21 million in deferred payments, pending compliance with precedent conditions, including final approval by CADE (OGJ Online, May 26, 2022).
One of Brazil’s leading asphalt production plants and the country’s only refinery equipped to produce naphthenic lubricants, LUBNOR processes ultra-heavy Brazilian crude oil from Espírito Santo basin and the Ceará cluster.
The LUBNOR sale comes as part of Petrobras’ broader downstream divestment program initiated under a June 2019 agreement between Petrobras and CADE governing the operator’s ongoing plan to divest most of its Brazilian refining and related logistics assets, as well as the opening of Brazil’s refining sector to promote increased competitiveness and transparency (OGJ Online, June 17, 2019).
Once completed, the LUBNOR deal would follow sale of the operator’s 46,000-b/d Isaac Sabbá refinery (REMAN)—including a storage terminal—in Manaus, Amazonas, to Atem's Distribuidora de Petróleo SA (Atem) subsidiary Ream Participações SA (OGJ Online, Dec. 1, 2022).
In 2021, Petrobras completed divestment of its former 333,000-b/d Refinaria Landulpho Alves (RLAM) refinery—now renamed Refinaria de Mataripe—in São Francisco do Conde in the Recôncavo Baiano region of Bahia, Brazil, to Mubadala Capital (MC), an arm of Abu Dhabi-based Mubadala Investment Co., as well as its 5,800-b/d Unidade de Industrialização do Xisto (SIX) unit—including a mine in one of the world’s largest oil shale reserves and a shale processing plant—in São Mateus do Sul, Paraná, to Forbes & Manhattan Resources Inc. (F&M Resources), a subsidiary of privately-held Forbes & Manhattan Inc. (F&M), Toronto, Ont. (OGJ Online, Nov. 12, 2021).
As part of its portfolio management strategy and improved allocation of its capital, Petrobras will continue to concentrate investments on downstream operations with lower greenhouse gas (GHG) emissions that have proved more profitable over the years under its RefTOP program, which aims to prepare the operator’s remaining refining assets both for an open, more competitive market in the country and the transition to a low-carbon economy.
