Petrobras delays downstream sell-off to accommodate bidders during COVID-19 outbreak

Petroleo Brasileiro SA (Petrobras) is postponing receipt of binding offers for its previously announced program to divest its Brazilian refining and related logistics assets to allow potential buyers enough time to conduct thorough due diligence amid delays to normal business operations as global operators shift their immediate focus on prevention measures to stem the coronavirus outbreak (OGJ Online, Jan. 31, 2020; Dec. 23, 2019; Oct. 25, 2019).

The decision to delay the downstream divestment process follows the start of binding phases for the sale of eight of its refining and associated logistics assets in early 2020 and late 2019, Petrobras said on Mar. 20.

Despite the delay, Petrobras said it remains committed to selling the downstream assets and respective logistics assets as part of the company’s 2020-24 strategic plan.

Petrobras, however, did not issue a timeframe for when the sale process would resume.

Downstream assets

First announced in April 2019, Petrobras’s downstream divestment program involves the sale of certain Brazilian refineries with total refining capacity of 1.1 million b/d (OGJ Online, May 2, 2019).

The downstream sell-off includes the following locations and assets:

• In Manaus, Amazonas, the Isaac Sabbá refinery (REMAN) has a processing capacity of 46,000 b/d and includes a storage terminal.
• In Fortaleza, Ceará, Lubrificantes e Derivados de Petróleo do Nordeste (LUBNOR) has a processing capacity of 8,000 b/d and is one of the national leaders in asphalt production, as well as the only plant in Brazil to produce naphthenic lubricants.
• In São Mateus do Sul, Paraná, Shale Industrialization Unit (SIX) has an installed capacity of 6,000 b/d, with assets that include a mine in one of the largest oil shale reserves in the world and a shale processing plant.
• In Pernambuco, Refinaria Abreu e Lima (RNEST) has a processing capacity of 130,000 b/d as well as the potential to double its capacity 260,000 b/d with startup of a second processing line. Assets at the site include a storage terminal and a 101-km set of short pipelines.
• In Bahia, Refinaria Landulpho Alves (RLAM) has a processing capacity of 333,000 b/d, with assets that include four storage terminals and a set of pipelines totaling 669 km.
• In Paraná, Refinaria Presidente Getulio Vargas (REPAR) has a processing capacity of 208,000 b/d, with assets that include five storage terminals and a 476-km set of pipelines.
• In Rio Grande do Sul, Refinaria Alberto Pasqualini (REFAP) has a processing capacity of 208,000 b/d, with assets that include two storage terminals and a set of pipelines totaling 260 km.
• In Betim, Minas Gerais, Refinaria Gabriel Passos (REGAP) has a processing capacity of 166,000 b/d, with assets that include a set of pipelines of more than 720 km.