Petróleo Brasileiro SA (Petrobras) has completed the sale of its 333,000-b/d Refinaria Landulpho Alves (RLAM) refinery in São Francisco do Conde in the Recôncavo Baiano region of Bahia, Brazil, to Mubadala Capital (MC), an arm of Abu Dhabi-based Mubadala Investment Co. (OGJ Online, Mar. 25, 2021).
As part of the transaction finalized on Nov. 30, Petrobras sold its shares in the RLAM refinery and related assets—including four storage terminals and a set of pipelines totaling 669 km—to MC Brazil Downstream Participações for $1.8 billion, an amount that reflects the purchase price of $ 1.65 billion, adjusted for monetary correction and variations in working capital, net debt, and investments, Petrobras said.
The contract also provides for a final adjustment to the purchase price, which will be determined in the coming months, according to the operator.
Effective Dec. 1, the former RLAM refinery has been renamed Refinaria de Mataripe and is now operated by Acelen, a company newly created by MC expressly for operation of the site, Petrobras confirmed.
Petrobras—which will offer ongoing support to Acelen for a transitional period following the sale as part of a service provision agreement to ensure the safety and uninterrupted operation of the assets—stressed the importance of the RLAM divestment as an important step in the company’s portfolio management strategy and capital allocation improvement plan, both of which aim to maximize shareholder value as well as returns for Brazil’s economy.
“This sale is an important milestone for Petrobras and the fuel sector in the country. We believe that, with new companies operating in refining, the market will be more competitive, and we will have more investments, which tends to strengthen the economy and generate benefits for society,” said Joaquim Silva e Luna, Petrobras’ chief executive officer, adding that the company will retain, operate, and improve operational performance of five Brazilian refineries.
The RLAM divestment comes as part of Petrobras’ June 2019 agreement with Brazil’s Administrative Council for Economic Defense (CADE) governing the operator’s ongoing program to divest most of its Brazilian refining and related logistics assets, as well as the opening of Brazil’s refining sector to increased competitiveness and transparency (OGJ Online, June 12, 2019).
Confirmation of RLAM’s sale follows Petrobras’ mid-November announcement that it signed a contract to sell its 5,800-b/d Unidade de Industrialização do Xisto (SIX) unit—including a mine in one of the world’s largest oil shale reserves and a shale processing plant—in São Mateus do Sul, Paraná, as well as the operator’s Oct. 1 confirmation that it terminated a binding proposal for the proposed sale of the 208,000-b/d Refinaria Alberto Pasqualini (REFAP) refinery and associated assets—including two storage terminals as well as a set of pipelines totaling 260 km—in Rio Grande do Sul (OGJ Online, Nov. 12, 2021; Oct. 1, 2021).
Status of downstream divestments
Cancellation of REFAP’s sale came in the wake of Petrobras’ August notification that potential buyers previously interested in purchasing its 130,000-b/d Refinaria Abreu e Lima (RNEST) refinery in Pernambuco—which has the potential to double its capacity 260,000 b/d with startup of a second processing line and includes both a terminal and a 101-km set of short pipelines—formally declined to submit a binding proposal for the assets (OGJ Online, Aug. 26, 2021).
At the time, Petrobras said it would evaluate next steps regarding RNEST’s future after completing internal procedures to end the refinery’s then-current sale process.
In February, Petrobras also decided to close and restart the sale process for its 208,000-b/d Refinaria Presidente Getulio Vargas (REPAR) refinery and related assets—including five storage terminals and a 476-km set of pipelines—in Paraná after initial binding proposals fell short of Petrobras' economic-financial evaluation for the assets.
While revised divestment plans for REFAP, RNEST, and REPAR remain pending, Petrobras also has inked a preliminary sales agreement for the 46,000-b/d Isaac Sabbá refinery (REMAN)—including a storage terminal—in Manaus, Amazonas (OGJ Online, June 10, 2021).
Upon announcing cancellation of the REFAP deal, Petrobras said competitive sale processes remained under way and negotiations ongoing for other refining assets included in the operator’s Brazilian downstream divestment program, including the 166,000-b/d Refinaria Gabriel Passos (REGAP) refinery—including a set of pipelines of more than 720 km—in Betim, Minas Gerais, as well as the 8,000-b/d Lubrificantes e Derivados de Petróleo do Nordeste (LUBNOR) refinery in Fortaleza, Ceará.
While Petrobras previously said it planned to start a new competitive process for sale of RFAP, the operator has yet to reveal a timeline for when that process might begin. Official details regarding the status of sale processes for REGAP and LUBNOR also have yet to emerge.
Existing refining system
While the downstream divestment program remains ongoing, Petrobras said on May 24 it is proceeding with a program to prepare its remaining refining assets for an open, more competitive market in the country, as well as for the transition to a low-carbon economy.
Known as RefTOP, the program consists of a set of initiatives that seek to implement improvements to increase efficiency and operational performance of Brazilian refineries not involved in the divestment portfolio, which include its:
- 170,000-b/d Refinaria Presidente Bernardes (RPBC) refinery in Cubatão, São Paulo.
- 239,000-b/d Duque de Caxias (REDUC) refinery in the Baixada Fluminense area of Duque de Caxias, Rio de Janeiro.
- 57,000-b/d Refinaria de Capuava (RECAP) in Mauá, São Paulo.
- 434,000-b/d Refinaria de Paulínia (REPLAN) refinery in Paulínia, São Paulo.
- 252,000-b/d Refinaria Henrique Lage (REVAP) in São José dos Campos, São Paulo.
Alongside initiatives to increase the refineries' energy performance by enabling better reuse of inputs such as natural gas, electricity, and steam generated by Petrobras’s own operations, the planned $300-million RefTOP program also will promote the use of digital technologies, automation, and robotization throughout the refining complexes, including expanding existing use of digital twins.
Another important driver of the program is increasing production of high value-added products such as diesel and propylene, the latter of which will serve as feedstock for the petrochemical industry to help meet rising demand for plastics.
Petrobras said the program will help the refineries leverage processing of Brazil’s own low-sulfur presalt crudes, achieving competitive advantages and opportunities for increasing margins by favoring production of low-sulfur S-10 diesel and bunker fuel.