Raízen to shed Argentinian refinery, related downstream assets

Global independent energy and commodities firm Mercuria Energy Group Ltd. has entered a binding agreement to acquire 100% of Raízen SA subsidiary Raízen Energia SA’s downstream and related operations in Argentina, including Raízen Argentina SAU’s 108,000-b/d refinery at Dock Sud in Avellaneda County, Buenos Aires Province.

Alongside the Dock Sud refinery, the deal also will involve transfer of fuel distribution and other unidentified associated infrastructure assets—as well as assumption of Raízen Argentina’s debt—to Mercuria-owned Latam Downstream Holdings Ltd. and Silver Projects I SAU, Raízen told investors on June 4.

Estimated at an overall value of $1.42 billion, the deal will consist of a cash payment to be made on closing of the transaction, subject to usual adjustments, including variations in working capital and net debt, regulatory and judicial approvals, and other undisclosed adjustments contracted for between the parties, according to Raízen.

Raízen said the proposed divestment of the Argentinian downstream assets aligns with the company’s strategy of optimizing its business portfolio, simplifying its operational structure, and implementing disciplined capital allocation that focuses on priority markets and geographies.

Net proceeds from the sale will be used to manage Raízen capital structure, the operator said.

Mercuria’s planned acquisition of the downstream assets comes as part of the firm’s long-term commitment of strategic investment across global energy markets, as well as its belief in Argentina’s importance as an energy market with strong long-term fundamentals and opportunities for operational growth and investment, the company said in a separate release.

“Mercuria has the financial strength, operational capability, and long-term perspective to support and grow this business,” said Brian Falik, Mercuria’s global chief investment officer.

Upon closing of the deal, Falik said Mercuria is “committed to ensuring continuity for employees, customers, suppliers, and partners, while investing responsibly in the future development of the platform.”

Mercuria said continuity and operational reliability of the business and infrastructure assets will remain priorities throughout the transition process following the acquisition.

While the parties did not reveal a definitive closing date for the transaction, Raízen said it expects to finalize the deal by yearend subject to customary closing conditions.