Further delays seen for Brazil's Abreu e Lima refinery

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Apr. 16 -- The start-up of Brazil’s planned 230,000-b/d Abreu e Lima refinery, now under construction in Pernambuco state, has been delayed by another 7 months, according to an executive of state-owned Petroleo Brasileiro SA (Petrobras).
Paulo Roberto Costa, Petrobras downstream director, said the launch had been set back to November 2012 from April 2012 as the state-run firm had to repeat some processes to negotiate better prices for some of the refinery’s systems.

Petrobras is developing the $12 billion refinery under a joint venture agreement with Venezuela’s state-owned Petroleos de Venezuela SA. Under the JV agreement, Petrobras holds a 60% stake, while PDVSA holds 40%.

Costa also noted that PDVSA has not yet paid the more than $400 million it owes as a first payment for its stake in the refinery. Costa was repeating remarks he made in March, when he said Petrobras had received no official word from PDVSA about its payment of $490 million for the refinery.

According to Brazilian state media, the $490 million refers only to the audited part PDVSA had to pay for costs to August 2009. In addition, PDVSA is expected to cover 40% of a $5.039 billion loan that Petrobras took out with the Brazilian Development Bank for the refinery.

"The contract hasn't even been signed yet,” said Costa in March. “All of the contracts have been read through and there is no further discussion about a single technical aspect.” At the time, he also said, “Petrobras was taking care of business by itself and there has been no delay.”

Last December, Petrobras signed five contracts, valued at $5.165 billion, for the Abreu e Lima refinery. The signing of the contracts coincided with a statement by Costa that the refinery would cost 23 billion reais—more than triple its previous estimate.

At the time, Costa also said the expected start-up date had been delayed to April 2012 from March 2011 (OGJ Online, Dec. 4, 2009).

Contact Eric Watkins at hippalus@yahoo.com.

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