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Petrobras opens rebidding for its fifth largest refinery in Brazil

September 23/2020

MOSCOW (MRC) -- Brazilian oil company Petrobras said on Monday it will open another round of bidding for its Repar refinery in the state of Parana after receiving binding offers that were too similar in value, reported Reuters.

Repar is Brazil's fifth largest refinery, able to process 208,000 barrels per day, or 9% of the country's capacity.

Petrobras has been trying to sell refineries since at least 2012 with no success, and still produces more than 98% of fuels in Brazil.

The new round starts as Brazil's Supreme Court considers blocking Petrobras' sale of Repar and other refineries, with justices set to rule on the matter by Friday.

Petroleo Brasileiro SA, as the state-controlled company is formally known, must follow specific legislation aimed at keeping asset sales competitive, including that bids be different. Sales also fall under scrutiny of governmental entities.

The company considered the offers low and is asking bidders to raise their prices for the Parana state refinery, according to two people involved in the negotiations who declined to be named as information is private.

Even if the Supreme Court approves the sales, Petrobras doesn't rule out keeping the asset if prices don't meet the minimum range set by its internal technical team, the people said.

Petrobras said in a statement on Monday that three separate groups led by Ultrapar, Raizen and China's Sinopec are part of this phase of the competition. The producer did not give any details about the companies' bids. The prices are highly secret in this phase of the competition.

Lack of buyers for fear of fuel price interference, restrictions by an audit court and anti-privatization movements have prevented sales in the past. More recently, Congress and the Supreme Court have also raised impediments.

The winner of this phase of the Repar competition would be able to exclusively negotiate the contract terms with Petrobras, a process which can take months.

According to Petrobras' internal rules, if the contract terms substantially change after the negotiation, which often happens, the oil company would need to call back competitors for a third round of bids, based on price only.

As MRC reported previously, Petrobras may need more than a year to divest its stake in Braskem, said Andrea Almeida, Petrobras CFO, in early July. She said during the company�s recent webinar that Petrobras plans to give more time for potential investors to make offers for the company"s assets, including for its refineries and stakes at its petrochemical and fuel distribution affiliates. The divestment of Petrobras"s stake in Braskem in 2020 would be desirable but "might not be possible" as the COVID-19 pandemic has changed market conditions, she said. The company plans to close part of its refinery sales in 2021. In December, Roberto Castello Branco, CEO of Petrobras, said that he wants to sell the company�s stake in Braskem within a year. Petrobras owns 32.15% of Braskem.

We remind that Braskem is no longer pursuing a petrochemical project, which would have included an ethane cracker, in West Virginia. And the company is seeking to sell the land that would have housed the cracker. The project, announced in 2013, had been on Braskem"s back burner for several years.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's overall PE production totalled 1,712,400 tonnes in the first seven months of 2020, up by 58% year on year. Linear low density polyethylene (LLDPE) accounted for the greatest increase in the output. At the same time, overall PP production in Russia increased in January-July 2020 by 24% year on year to 1,063,700 tonne. ZapSibNeftekhim accounted for the main increase in the output.

Headquartered in Rio de Janeiro, Petrobras is an integrated energy firm. Petrobras" activities include exploration, exploitation and production of oil from reservoir wells, shale and other rocks as well as refining, processing, trade and transport of oil and oil products, natural gas and other fluid hydrocarbons, in addition to other energy-related activities.
Author:Margaret Volkova
Tags:PP, PE, LLDPE, crude and gaz condensate, propylene, ethylene, petrochemistry, Braskem, Petrobras, Brazil, Russia, USA.
Category:General News
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