Petrobras inks deal to sell third downstream processing unit

Petróleo Brasileiro SA (Petrobras) has signed a contract to sell 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.

As part of the deal signed on Nov. 11, F&M Resources will acquire Petrobras’s ownership interest in SIX and its associated assets for an overall purchase price of $33 million, $3 million of which was paid as a guarantee at the contract signing, with the remaining $30 million to be paid upon closing of the transaction pending compliance with precedent conditions as well as final approval by Brazilian regulators the Administrative Council for Economic Defense (CADE) and Agência Nacional do Petróleo, Gás Natural e Biocombustíveis (ANP), Petrobras said.

Petrobras—which will continue operating SIX until the transaction closes—also has agreed to offer ongoing support to F&M Resources for a transitional period of up to 15 months following the sale to ensure the safety and uninterrupted operation of the assets.

Petrobras also said it expects to sign a separate lease agreement with F&M Resources that will allow Petrobras to continue unidentified research activities in experimental plants located on the SIX asset.

The operator did not reveal a timeframe for when it anticipates final regulatory approvals for and completion of the proposed SIX transaction.

This latest contract for the sale of SIX and its associated assets follows Petrobras’ Oct. 1 confirmation that it ended discussions with Ultrapar Participações SA (Ultrapar) related to the latter’s now terminated binding proposal for the proposed purchase of Petrobras’ 208,000-b/d Refinaria Alberto Pasqualini (REFAP) refinery and associated assets—including two storage terminals as well as a set of pipelines totaling 260 km—in Rio Grande do Sul (OGJ Online, Oct. 1, 2021).

Downstream divestments to date

Cancellation of REFAP’s sale to Ultrapar came in the wake of Petrobras’ August notification that potential buyers previously interested in purchasing its 130,000-b/d Refinaria Abreu e Lima (RNEST) refinery in Pernambuco—which has the potential to double its capacity 260,000 b/d with startup of a second processing line and includes both a terminal and a 101-km set of short pipelines—formally declined to submit a binding proposal for the assets (OGJ Online, Aug. 26, 2021).

At the time, Petrobras said it would evaluate next steps regarding RNEST’s future after completing internal procedures to end the refinery’s then-current sale process.

In February, Petrobras also decided to close and restart the sale process for its 208,000-b/d Refinaria Presidente Getulio Vargas (REPAR) refinery and related assets—including five storage terminals and a 476-km set of pipelines—in Paraná after initial binding proposals fell short of Petrobras' economic-financial evaluation for the assets.

While revised divestment plans for REFAP, RNEST, and REPAR remain pending, Petrobras has inked sale and purchase agreements with Mubadala Capital (MC)—an arm of Abu Dhabi-based Mubadala Investment Co.—for the 333,000-b/d Refinaria Landulpho Alves (RLAM) refinery in São Francisco do Conde in the Recôncavo Baiano region of Bahia, and fuel distributor Atem's Distribuidora de Petróleo SA (Atem) for the 46,000-b/d Isaac Sabbá refinery (REMAN)—including a storage terminal—in Manaus, Amazonas (OGJ Online, June 10, 2021).

Upon announcing cancellation of the Ultrapar deal for REFAP, Petrobras said competitive sale processes remained under way and negotiations ongoing for other refining assets included in the operator’s Brazilian downstream divestment program, including the 166,000-b/d Refinaria Gabriel Passos (REGAP) refinery—including a set of pipelines of more than 720 km—in Betim, Minas Gerais, as well as the 8,000-b/d Lubrificantes e Derivados de Petróleo do Nordeste (LUBNOR) refinery in Fortaleza, Ceará.

While Petrobras previously said it planned to start a new competitive process for sale of RFAP, the operator has yet to reveal a timeline for when that process might begin. Official details regarding the current status of sale processes for REGAP and LUBNOR also have yet to emerge to date.