Brazil’s Petrobras aims to start up Itaborai gas unit in 2024, Lubnor refinery disposal on hold

Jonathan Lopez


SAO PAULO (ICIS)–Petrobras has signed a contract with engineering service provider Toyo Setal Empreendimentos to finish the construction of its beleaguered Itaborai gas processing plant, the Brazilian energy major said over the weekend.

Financial details were not disclosed.

Petrobras said it is still aiming to start up the natural gas processing unit in the so-called ‘Itaborai GasLub Cluster’ in 2024, and it could become a key feedstock provider for the Brazilian petrochemical industry.

Last week, the Petrobras CEO also said that the company’s divestment of its Lubnor refinery to Grepar Participacoes might be reviewed because of land ownership issues.

Also last week, Petrobras denied recent local news reports and said it had yet to decide whether it was going to dispose of its stake in Brazilian petrochemical major Braskem.

Construction at Petrobras’ Itaborai gas processing unit – which is expected to deliver up to 21 m cubic metres (cbm)/day of natural gas extracted from the Santos Basin pre-salt reserves – was halted in June 2022.

The unit could be the key to providing feedstock to Brazil’s petrochemical industry by supplying it with natural gas liquids (NGLs).

Among other gases, NGLs include ethane which can be turned into ethylene and then used as a feedstock for polymers such as polyethylene (PE) and polypropylene (PP).

Last week, petrochemical major Braskem said it would consider the expansion of its Duque de Caxias, Rio de Janeiro cracker if it had access to more domestic supply of NGLs.

However, Braskem CFO Pedro Freitas said this was unlikely to happen in the short term.

Over the weekend, Petrobras said, “The other units required to start these operations, such as the auxiliary units located at the GasLub Cluster, and the sub-sea and onshore pipelines, have already completed their scope, and are in the final commissioning or pre-operation phase.”

The gas unit and the other associated facilities are part of the Petrobras Route 3 project which aims to increase raw material supply from pre-salt reserves in the Atlantic Ocean.

Brazil’s new administration under President Luiz Inacio Lula da Silva wants Petrobras to suspend any divestment while the government works on a “reassessment” of its energy policy.

In 2022, under the previous CEO appointed by the Bolsonaro administration, Petrobras agreed to sell its Lubnor refinery, in Brazil’s northeast, and its associated logistics assets to Grepar Participacoes for $34m.

However, speaking to journalists in Rio de Janeiro last week, Jean Paul Prates, the recently appointed CEO of Petrobras, said the Lubnor divestment might be reviewed because of land ownership issues where the facility is located, according to Brazilian daily O Estado de S. Paulo, which is also known as Estadao.

Neither Grepar Participacoes nor Petrobras responded to a request for a comment at the time of writing.

Petrobras, which is majority owned by the state, is also a key shareholder in Braskem with a 36.1% stake. Novonor, which was formerly known as Odebrecht but was forced to change its name after a string of corruption scandals, holds a 38.3% stake.

Several smaller investors hold the remaining 25.6% stake in Braskem which trades on the Sao Paulo stock exchange or Bovespa, and commonly known as Ibovespa.

Last week, in response to local news reports claiming that Petrobras was mulling the divestment of its stake at Braskem, Petrobras issued a statement “regarding the pieces of news”, saying that a decision has yet to be taken.

The energy major said, “Petrobras clarifies that all actions related to its participation in Braskem require careful analysis from a portfolio management perspective and should be conducted in compliance with applicable governance practices and internal procedures.”

Focus article by Jonathan Lopez

Additional reporting by Al Greenwood


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