Petrobras gets loan for Revap refinery upgrades

Eric Watkins
Oil Diplomacy Editor

LOS ANGELES, Dec. 14 -- Brazil's Petroleo Brasilerio SA (Petrobras) has borrowed ¥750 billion from a consortium of Japanese banks to finance its investments in the 226,000-b/d Henrique Lage (Revap) refinery.

Sumitomo Mitsui Banking Corp., Mizuho Corporate Bank, and Tokyo-Mitsubishi UFJ Bank Ltd. provided the 10-year loan, which is backed by the Japanese export development agency Nippon Export & Investment Insurance.

The refinery, which is in Sao Jose dos Campos in southeastern Sao Paulo state, produces 15% of Brazil's oil derivatives.

Refinery upgrade
The Revap complex produces petrochemical naphtha, diesel oil, petrol, cooking gas, fuel oil, asphalt, propane, and kerosine. It supplies markets in the Vale do Paraiba region of southeastern Minas Gerais and part of Sao Paulo state.

Petrobras has been conducting a $2.5 billion modernization program at the refinery aimed at raising its heavy oil processing capacity, improving the quality of its diesel, and gasoline, and diversifying its product portfolio.

Last week, Petrobras named Claudio Pimentel manager of Revap, replacing Luiz Eduardo Valente, who will manage Petrobras's fertilizer plant at Fafen, in northeastern Sergipe state.

Attractive terms
Petrobras Chief Financial Officer Almir Barbassa told the state news agency that the conditions for the Japanese loan were "extremely attractive."

Barbassa said, "Of course conditions were not as good as a year ago, but they were pretty reasonable." He did not supply any further details, as the contract has a confidentiality clause.

However, Barbassa said Petrobras's 2008 fundraising plan, currently at $8.25 billion, is completed. "I think there's no room for anything else," he said.

The announcement of the loan follows reports last week that the Brazilian government has been negotiating with Chinese and other investors to guarantee investment in Petrobras.

Many suitors for Petrobras
"It's not only China, Petrobras has several opportunities," said Brazil Mines and Energy Minister Edison Lobao Dec. 8.

Lobao said there have been talks with representatives from the UAE, Japanese groups, and Canadian banks, as well as oil exploration equipment exporters with their own sources of financing.

Lobao said the talks took place both before and after the global financial crisis came to a head in mid-September, and that "Petrobras won't have problems. There will be generous sources, whether domestic or foreign."

Contact Eric Watkins at hippalus@yahoo.com.

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