Petrobras advances downstream divestment plans

Petroleo Brasileiro SA (Petrobras) has signed a commitment agreement with Brazil’s Administrative Council for Economic Defense (CADE) consolidating an understanding between the parties on the operator’s previously announced plan to divest its Brazilian refining assets (OGJ Online, May 2, 2019).

The agreement provides competitive conditions encouraging new economic agents to enter the downstream market, as well as suspends the administrative investigation opened by the CADE Court to investigate alleged abuse of Petrobras’s dominant position in the refining segment, the company said.

Among other related but undisclosed commitments, Petrobras, by signing the agreement, has committed to sell all eight of its Brazilian refineries with total refining capacity of 1.1 million b/d first announced on Apr. 26 based on a schedule agreed upon by the parties, according to the terms of the company’s divestment methodology, pursuant to regulatory provisions, subject to the economic-financial assessments relating to each asset, as well as the technical, legal, financial, and compliance requirements by potential buyers.

The agreement also provides that the following refineries considered as potential competitors may not be acquired by the same buyer or companies within the same economic group:

• Refinaria Landulpho Alves (RLAM) and Refinaria Abreu e Lima (RNEST).

• Refinaria Presidente Getulio Vargas (REPAR) and Refinaria Alberto Pasqualini (REFAP).

• Refinaria Gabriel Passos (REGAP) and RLAM.

Additionally, Petrobras has agreed that the schedule and fulfillment of the commitments assumed with CADE will be followed up by an external agent hired by Petrobras according to specifications to be established by mutual agreement.

Petrobras said it believes execution of the agreement consolidates the cooperation efforts between CADE and the company, providing greater legal certainty to the announced divestment.

While the company did not disclose a specific timeframe for the refinery divestment program, Petrobras did confirm subsequent phases of the refining divestment projects will be revealed to the market in a timely manner.

Alongside RLAM, RNEST, REPAR, REFAP, and REGAP, the proposed refining divestment program includes sale of the following refineries: Unidade de Industrializacao do Xisto, Refinaria Isaac Sabba, and Lubrificantes e Derivados de Petroleo do Nordeste.

The proposed refinery divestments follow Petrobras’s completed sale of its Pasadena Refining System Inc.—including the 110,000-b/d refinery in Pasadena, Tex.—and PRSI Trading LLC businesses to Chevron USA Inc. in May (OGJ Online, Jan. 31, 2019).

Contact Robert Brelsford at [email protected].