Costs spiral for Brazil-Venezuela refinery project

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Aug. 28 -- Brazil’s Petroleo Brasileiro SA (Petrobras), already under fire from legislators, said the estimated cost of the joint-venture Abreu e Lima refinery project tentatively stands at $12 billion, or nearly three times more than the original estimate of $4.05 billion.

"It's important to clarify that the total investments are under evaluation and will be subject to approval by the executive board after a technical and economic feasibility study," Petrobras said.

The Brazilian firm said the original estimate of $4.05 billion came in 2006 during the conceptual project preparation phase, when the expected capacity of the plant was 200,000 b/d of oil. At that time, it said the cost of building a refinery was estimated at about $20,000/bbl of capacity.

Petrobras said the cost rose to $12 billion with the finalization of the basic plans for the project and the decision to increase its refining capacity by 15% to 230,000 b/d. It said the upward cost estimate fits with current construction costs for a refinery, which have risen to $50,000/bbl of capacity.

Petrobras said in addition to the increase in construction costs, the budget for the refinery was affected by the depreciation of the dollar relative to the Brazilian real.

The Petrobras statement came after complaints by opposition members of a legislative committee which is investigating alleged irregularities at the mixed capital firm, whose shares are traded on stock markets in Sao Paulo, New York, Madrid, and Buenos Aires.

The legislators based their complaints on an investigation by the office of Brazil's controller-general, which allegedly has found irregularities and over-invoicing and overpricing by companies hired to build the refinery.

The Abreu e Lima refinery is under construction in Brazil's northeastern Pernambuco state by Petrobras in association with Venezuela’s state-own Petroleos de Venezuela SA (PDVSA). Site work at the refinery project, which started last year, is near completion, the company added.

Earlier this month, Petrobras and PDVSA reached an agreement in principle on the final details of the joint venture, and the accord is expected to be signed in September, during bilateral trade talks between presidents of the two countries (OGJ Online, Aug. 6, 2009).

Contact Eric Watkins at hippalus@yahoo.com.

Related Articles

ExxonMobil lets contract for Antwerp refinery

12/17/2014 ExxonMobil Petroleum & Chemical BVBA has let an engineering, procurement, and construction contract to Fluor Corp. for a delayed coker to be in...

BPC report examines 40 possible options to reform RFS

12/16/2014 The Bipartisan Policy Center issued a report outlining 40 possible options for reforming the federal Renewable Fuels Standard in an effort to move ...

Turkish refinery secures Canadian financing

12/16/2014 Export Development Canada (EDC) said it is participating as lead arranger in the $3.3 billion debt-financing consortium supporting STAR Rafineri AS...

Angola’s Sonangol secures $2 billion loan for refinery, other projects

12/15/2014 China Development Bank (CDB) has extended a $2 billion line of credit to state-owned Sonangol EP to support expansion projects in Angola’s oil and ...

Pertamina plans $25 billion revamp of Indonesian refineries

12/15/2014 PT Pertamina (Persoro) has entered agreements with Saudi Aramco, JX Nippon Oil & Energy Corp., and China Petroleum & Chemical Corp. (Sinope...

PBF Energy, PBF Logistics make management changes

12/12/2014 Matthew Lucey, currently executive vice-president of PBF Energy Inc., will succeed Michael Gayda as the company’s president. Todd O’Malley, current...

Repairs under way at ORPIC’s Muscat refinery

12/11/2014 Oman Oil Refineries & Petroleum Industries Co. (ORPIC) said it plans to resume operations at its 106,000-b/d Mina Al Fahal refinery near Muscat...

Phillips 66 advances plans for splitter at Sweeny refinery

12/11/2014 Phillips 66 has filed an application with state regulators for a permit to build a condensate splitter at its 247,000-b/d Sweeny refinery in Old Oc...

Samref wraps Yanbu refinery revamp

12/11/2014 Saudi Aramco-Mobil Refinery Co. Ltd. (Samref), a 50-50 joint venture of Saudi Aramco and ExxonMobil Corp. subsidiary Mobil Yanbu Refining Co. Inc.,...

White Papers

AVEVA NET Accesses and Manages the Digital Asset

Global demand for new process plants, power plants and infrastructure is increasing steadily with the ...
Sponsored by

AVEVA’s Approach for the Digital Asset

To meet the requirements for leaner project execution and more efficient operations while transferring...
Sponsored by

Diversification - the technology aspects

In tough times, businesses seek to diversify into adjacent markets or to apply their skills and resour...
Sponsored by

Engineering & Design for Lean Construction

Modern marketing rhetoric claims that, in order to cut out expensive costs and reduce risks during the...
Sponsored by

Object Lessons - Why control of engineering design at the object level is essential for efficient project execution

Whatever the task, there is usually only one way to do it right and many more to do it wrong. In the c...
Sponsored by

Plant Design for Lean Construction - at your fingertips

One area which can provide improvements to the adoption of Lean principles is the application of mobil...
Sponsored by

How to Keep Your Mud System Vibrator Hose from Getting Hammered to Death

To prevent the vibrating hoses on your oilfield mud circulation systems from failing, you must examine...
Sponsored by

Duty of Care

Good corporate social responsibility means implementing effective workplace health and safety measures...
Sponsored by

Available Webcasts


On Demand

Optimizing your asset management practices to mitigate the effects of a down market

Thu, Dec 11, 2014

The oil and gas market is in constant flux, and as the price of BOE (Barrel of Oil Equivalent) goes down it is increasingly important to optimize your asset management strategy to stay afloat.  Attend this webinar to learn how developing a solid asset management plan can help your company mitigate costs in any market.

register:WEBCAST


Parylene Conformal Coatings for the Oil & Gas Industry

Thu, Nov 20, 2014

In this concise 30-minute webinar, participants have an opportunity to learn more about how Parylene coatings are applied, their features, and the value they add to devices and components.

register:WEBCAST


Utilizing Predictive Analytics to Optimize Productivity in Oil & Gas Operations

Tue, Nov 18, 2014

Join IBM on Tuesday, November 18 @ 1pm CST to explore how Predictive Analytics can help your organization maximize productivity, operational performance & associated processes to drive enterprise wide productivity and profitability.

register:WEBCAST


US HYDROCARBON EXPORTS Part 3 — LNG

Fri, Nov 14, 2014

US LNG Exports, the third in a trilogy of webcasts focusing on the broad topic of US Hydrocarbon Exports.

A discussion of the problems and potential for the export of US-produced liquefied natural gas.

These and other topics will be discussed, with the latest thoughts on U.S. LNG export policy.

register:WEBCAST


Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected