Essar, Raízen and Ultra evaluate proposals for Petrobras refinery

(Reuters) – Petrobras is expected to receive binding proposals on December 10 for its refinery in Rio Grande do Sul, Refap, from the Indian conglomerate Essar Group and local companies Raízen and Ultrapar Participações among potential stakeholders , said people involved in the negotiations.

All three companies were pre-qualified for the binding phase of the Refap sale process, also known as Alberto Pasqualini, said the sources, who spoke on condition of anonymity because the details are confidential.

Petrobras will also receive binding offers on the same day for its refinery in Paraná, Repar, or Presidente Getulio Vargas, as part of a new round of bidding for the asset. In September, both Raízen and Ultrapar presented similar proposals in values.

Petrobras, Raízen and Ultra declined to comment. Essar did not immediately return a request for comment.

The refineries’ sale processes are part of Petrobras’ plan to end its quasi-monopoly on refining in Brazil and open one of the world’s largest fuel markets to private competitors.

Nine refining units went on sale, or about half of Brazil’s refining capacity.

The search for offers for the two refineries on the same day is a change in Petrobras’ strategy with the aim of increasing competition for assets and potentially obtaining larger proposals.

Both Refap and Repar are located in the southern region of Brazil and have a production capacity of around 200 thousand barrels per day each, or about 18% of the country’s refining capacity.

According to rules for the preservation of competition, the units cannot be purchased by the same company after the divestment of the state-owned company.

Petrobras’ most recent attempt to privatize its refineries has suffered long pauses, with divestments being questioned in court and international demand for fuels and oil prices collapsing amid the coronavirus pandemic crisis.

IN PROGRESS

This week, Petrobras will also receive proposals for its Lubnor refinery in the Northeast, with a processing capacity of 8,000 barrels of oil per day.

At the moment, the state-owned company is also in exclusive negotiations with Abu Dhabi’s Mudabala Investment fund for the sale of its second largest refinery, known as Rlam.

Essar has also submitted an offer for Rlam and may restart negotiations with Petrobras if a new round of proposals is opened.

Petrobras said last month that it received binding offers from the Reman refinery in Manaus (AM).