Brazil Petrobras receives binding offers for three more refineries

Author: Al Greenwood

2020/12/01

HOUSTON (ICIS)--Brazil-based Petrobras has received binding offers for three additional refineries, an executive with the state energy producer said on Tuesday.

Those refineries are REMAN in Amazonas state, LUBNOR in Ceara state and SIX in Parana state, said Anelise Lara, chief refining and natural gas officer for Petrobras. She was among several executives who spoke during the company's investor day.

The SIX unit converts the kerogen found in shale into oil through pyrolysis.

Lara did not identify the companies that submitted the binding offers.

Net week, Petrobras plans to receive binding offers for REPAR in Parana state and REFAP in Rio Grande do Sul state, Lara said.

She did not identify any of the bidders for REFAP.

One of the bidders for REPAR is Ultrapar, a Brazilian conglomerate that owns the fuel retailer Ipiranga and the surfactants producer Oxiteno. Other bids came from a consortium led by Raizen and China Petroleum & Chemical Corp (Sinopec).

Petrobras is in talks with Mubadala Investment in regards to RLAM in Bahia state.

The following shows the seven oil refineries that Petrobras plans to divest.

Refinery Location Capacity (bbl/day)
LUBNOR (Lubrificantes e Derivados do Nordeste) Fortaleza, Ceara 8,000
REFAP (Alberto Pasqualini) Canoas, Rio Grande do Sul 208,000
REGAP (Gabriel Passos) Betim, Minas Gerais 166,000
REMAN (Isaac Sabba) Manaus, Amazonas 46,000
REPAR (Presidente Getulio Vargas) Araucaria, Parana 208,000
RLAM (Landulpho Alves) Mataripe, Bahia 333,000
RNEST (Abreu e Lima) Ipojuca, Pernambuco 130,000

LUBNOR's capacity includes 2,000 bbl/day of naphthenic base oil.

The eighth refinery, SIX, is in Sao Mateus do Sul, Parana.

The REGAP and RNEST refineries should enter the binding phase in the first quarter of 2021, Lara said. This would have happened sooner had it not been for the coronavirus, which caused Petrobras to delay site visits.

REMAINING REFINERIES AT PETROBRAS
The divestments will leave Petrobras with six refineries, with five of them concentrated in the southeast of the country, home to Sao Paulo and Rio de Janeiro and close to Brazil's pre-salt oil reserves, Lara said.

The following table shows the refineries that will remain with Petrobras.

Refinery Location Capacity (bbl/day)
RECAP (Capuava) Capuava, Sao Paulo 53,000
REDUC (Duque de Caxias) Duque de Caxias, Rio de Janeiro 239,000
REPLAN (Paulinia) Paulinia, Sao Paulo 415,000
REVAP (Henrique Lage) Sao Jose dos Campos, Sao Paulo 252,000
RPBC (Presidente Bernardes) Cubatao, Sao Paulo 170,000
RPCC (Potiguar Clara Camarao) Guamare, Rio Grande do Norte 38,000

The company plans to spend $3.7bn in capital expenditures in its refining segment in 2021-2025. Out of that amount, 35% will go towards operational efficiency, 19% will go towards a carbon-mitigation and water recycling projects, 8% will go towards continuing operations and another 8% will cover various expenses.

Petrobras will spend another 14% of the $3.7bn on hydrotreating units at REDUC, REVAP and REPLAN.

The projects at REDUC and REVAP are revamps, while the project at REPLAN will be a new unit.

The hydrotreating projects will allow Petrobras to produce more low-sulphur diesel.

The company did not provide a timeline for the projects nor did it disclose low sulphur capacities.

Brazil's refineries are important to its petrochemical industry because they provide feedstock to naphtha crackers.

ITABORAI PROJECTS
The remaining 16% of the $3.7bn capital expenditure budget could go towards developing a catalytic hydrocracking unit at Itaborai, Rio de Janeiro state. The project, called GasLub, will produce low-sulphur fuels and advanced lubricants from Group II base oils, Lara said. If pursued, the project would integrate GasLub with the Duque de Caxias refinery in Rio de Janeiro.

Petrobras is continuing to work on another project at Itaborai, a natural-gas processing plant that will have a capacity of 21 million cubic metres (mcm)/day, Lara said. That project will consume about $660m in capital expenditures in 2021-2025.

When completed, it will increase Petrobras's gas processing capacity to 87mcm/day from 66mcm/day.

The pipeline system that will feed the Itaborai plant, called Route 3, should start operating in either the fourth quarter of 2021 or the first quarter of 2022, said Rudimar Lorenzato, chief production development officer for Petrobras.

The Itaborai gas processing plant could provide Brazil with feedstock for gas cracking. Polyolefins producer Braskem operates an ethane cracker at Duque de Caxias in Rio de Janeiro state. The company has been evaluating plans to expand the crackers capacity based on the availability of competitive feedstock.

Nonetheless, Petrobras's projects at Itaborai would be a remnant of the much more ambitious Complexo Petroquimico do Rio de Janeiro (Comperj), envisioned to be an integrated refinery and petrochemical complex.

The construction of this larger project came to a standstill in 2014 amid the fallout from the Lava Jato corruption scandal.