Thyssen gains approval to build refinery in northern Brazil

Germany's Thyssen Rheinnstahl Technik GmbH has won formal approval to build a $1.8 billion, world-class grassroots refinery in northern Brazil.

Thyssen's plans were disclosed earlier this fall (OGJ, Sept. 14, 1998, p. 33).

David Zylberstajn, executive director of Brazil's National Petroleum Agency (ANP), granted permission to the German conglomerate to build the refinery in the northern state of Ceara, in partnership with the state government.

This is the first major grassroots downstream investment in Brazil since Congress passed a deregulation law in August 1997 that ended the 44-year monopoly of Petroleo Brasileiro SA (Petrobras) in the upstream and downstream sectors.

The refinery, dubbed Nordeste (Renor), will be located at the Pecem industrial port complex in the municipality of Caucaia. According to Hans Ulrich Gruber, Thyssen's executive director, the project will be implemented in two phases.

The first, to be concluded by 2003, will have 110,000 b/d crude oil processing capacity. During this phase, light crude will be imported from Nigeria and Angola as feedstock. During the second stage, processing capacity will be hiked to 200,000 b/d by 2008, with the incremental capacity fed by heavy crude oil from Brazil. Thyssen has an 85% stake in the refinery, with a 15% stake in partnership held by the Rio de Janeiro-based company Interoil.

The Pecem port complex includes an area reserved for oil products distributors with pipelines to transport the products. Gruber said that Ceara state was chosen because the state government offered fiscal incentives and committed itself to infrastructure projects to assure water and electricity supply to the Pecem port.

Zylberstajn said that the refinery will save the country $200 million in foreign currency exchange by backing out imports of refined products. While the Finance Ministry is projecting growth of only 1% in Brazil's gross domestic product for 1998, Brazilian refined products consumption continues to outpace economic growth, averaging about 4-5% this year, which tracks historical trends.

Brazil has 13 refineries of which 11 belong to Petrobras.

Brazil's refining capacity totals 1.81 million b/d. The other two private refineries are small and obsolete and were built before 1953, when Petrobras was inaugurated as an oil monopoly company. Petrobras and foreign oil companies have expressed interest in participating in the Ceara refining project.