PDVSA up against August deadline for Abreu e Lima refinery venture

Brazil’s state-run Petroleo Brasileiro SA (Petrobras) said Venezuela's state-owned Petroleos de Venezuela SA (PDVSA) faces an August deadline to fund its participation in the $16.25 billion Abreu e Lima refinery joint venture.

“PDVSA has until August to adhere to the joint venture and become a partner,” Petrobras Chief Executive Officer Jose Sergio Gabrielli said during a conference call with analysts.

Garielli and other Petrobras executives said PDVSA’s distance from the project is not unexpected and that Petrobras's new investment plan provides for the funds needed to complete the refinery if the Venezuelan firm abandons it altogether.

"If PDVSA leaves the project, we will not be prevented from completing it. It is accounted for in our new business plan that Petrobras assume 100% of the investment alone," said Petrobras Chief Financial Officer Almir Barbassa.

Barbassa told Spain’s EFE news agency that Petrobras expects PDVSA to remain a partner in the project, but that the Brazilian firm is working under "conservative" guidelines that require setting aside enough reserves to be able to finish the refinery by itself.

"The possibility (that PDVSA will pull out) is foreseen in the funds that were approved, but if PDVSA comes in we'll have excess resources that we'll be able to put into other projects," Barbassa said.

The Petrobras board has approved the firm’s 2011-15 business plan, giving the go ahead to $224.7 billion in investment, of which $35.4 billion will go toward expanding refining capacity.

"These resources include 100% of the investment needed for Petrobras to construct (the refinery) alone, which is what we are doing," said Barbassa, who added that PDVSA has so far contributed nothing to the project.

Barbassa’s words echoed Petrobras Downstream Director Paulo Roberto Costa who last year said PDVSA had not paid the more than $400 million it owed 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 (OGJ Online, Apr 26, 2010).

Petrobras is building the Abreu e Lima refinery, now 35% complete, at the port of Suape, near Recife, the capital of Pernambuco state. Petrobras was to hold a 60% stake in the 230,000-b/d refinery, with PDVSA holding 40%.

Contact Eric Watkins at hippalus@yahoo.com.

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