Brazil’s Grepar to take legal action against Petrobras after refinery sale cancelled
SAO PAULO (ICIS)–Grepar will take legal action and seek compensation from Petrobras after the Brazilian energy major unilaterally cancelled the sale of its Lubnor refinery, the prospective buyer said late on Monday.
Grepar agreed to acquire the Lubnor refinery in Fortaleza, in the northern state of Ceara, for $54m. The facility can process 8,200 bbl/day and is a major producer of asphalt and naphthenic lubricants, among other products.
However, on Monday 27 November, state-owned Petrobras cancelled the contract citing a “lack of compliance” with conditions as well as a missed deadline.
It took Grepar more than 10 hours to respond to Petrobras after being “surprised” to learn about the news from the media.
“Grepar will adopt, in the appropriate jurisdiction, legal measures to protect its right to be compensated for losses and damages that Petrobras has deliberately caused it, frustrating the deal already contracted,” said Grepar.
Grepar agreed to buy the Lubnor refinery and associated assets in 2022, when Petrobras was under management that had been appointed by Brazil’s previous administration.
However, in March the new administration of Luiz Inacio Lula da Silva appointed Jean Paul Prates as CEO of Petrobras, who at the time hinted that the Lubnor refinery divestment could be put on hold as the company reassessed its strategy.
After Petrobras’ cancellation this week, Grepar said it would not pursue the refinery’s purchase any longer.
“Despite Grepar’s contractual right to demand from Petrobras compliance with the contract signed, Grepar will not insist on maintaining the transaction as planned, given the breach of trust as well as Petrobras’ unequivocal intention not to proceed with the transaction,” it said.
“[This intention has been] explicitly reiterated in statements by CEO Jean Paul Prates as soon as he took command of the Petrobras in March this year.”
During the sale process, there were issues surrounding land ownership at the site. As Petrobras failed to mention these issues when it announced the cancellation, Grepar linked it to land ownership.
“The alleged impediment to business due to land conditions does not proceed. Such conditions over land ownership were linked to the precedent conditions that Grepar accepted months ago – Petrobras cannot raise this as a basis for the contract’s termination,” said Grepar.
“Grepar has complied with all the precedent conditions set in the contract and did waive conditions to which Petrobras would have been obliged [as part of the contract]. Therefore, only Grepar could terminate the contract.”
Front page picture: Entrance to the Lubnor
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