Brazil starts work on Abreu e Lima refinery

Eric Watkins
Senior Correspondent

LOS ANGELES, Sept. 5 -- Brazilian President Luiz Inacio Lula da Silva on Sept. 4 officially launched construction on the $4.05 billion Abreu e Lima refinery outside Recife, the largest city in northeastern Brazil and the capital of Pernambuco state.

Noticeably absent from the proceedings were any representatives of Venezuela's state-run Petroleos de Venezuela SA (PDVSA), formerly identified as a 40% partner in the refinery project, with Brazil state-owned Petroleo Brasileiro SA (Petrobras) holding the remaining 60%.

Under a memorandum of understanding between the two state oil companies, the new refinery is expected to process oil from Venezuela's Orinoco Belt and from Marlim field in the Campos basin off Brazil, with each country supplying 50% of the crude oil.

The agreement, however, appears to have hit an impasse over the terms of Petrobras's proposed participation in a project to develop Venezuela's Carabobo field, which was to provide Caracas' share of the oil to be processed at the refinery.

With negotiations over the field continuing, Petrobras said that by second half 2010 the refinery will begin to refine about 200,000 b/d of heavy oil to annually produce 814,000 cu m of petrochemical naphtha, 322,000 tons of LPG, 8.8 million tons of diesel fuel, and 1.4 million tons of oil coke. The products will be marketed locally and the in northern-northeastern Brazil.

Petrobras said the refinery's main production focus is on diesel fuel, particularly aimed at supplying the increased demand for derivatives in the northeastern region, which currently is fuel-deficient. The unit will be the first in Brazil to process 100% heavy oil.

In addition, the Abreu e Lima refinery will be capable of producing low-sulfur content derivatives and will be able to comply even with the strict European standards, which specify maximum emission limits of 10 ppm of sulfur.

Contact Eric Watkins at hippalus@yahoo.com.

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