Petrobras delays refinery sale amid CEO changes

Amid successive changes of command, Petrobras will need to ask CADE (Administrative Council for Economic Defense) for more time to sell the refineries it needs to make available to the market because of an agreement signed with the antitrust body in 2019.

More than two years after the agreement for the sale of the eight assets, only one had the sale approved by the antitrust authority and four others are in different stages of the process. The delay already prompted Cade to review the time limit earlier this year, but a new round of negotiations will now be required.

Gustavo Augusto de Lima, counselor at Cade, believes that the changes in the presidency of the state-owned company hinder the company from moving forward with the sales plan. “There are problems of governance and leadership change that will still take some time and the Council has to consider all of this,” he told Folha.

Lima joined Cade in April this year and has been working in the oil and gas area at the beginning of his term. He says that the renegotiation with Petrobras can have three options.

The first is to increase the deadline, the second is to define a fine to compensate for the breach of part of the agreement and the third is to reopen the investigation against the state company for anti-competitive practices in the refining sector.

It was precisely to close this investigation that Cade and Petrobras reached an agreement for the sale of the assets. “Of the three, it seems that Cade is making greater efforts to see the agreement through to the end [increasing the deadline]”, revealed Lima.

In March this year, Cade and Petrobras had already extended the deadline for the sales. The state-owned company presented as justifications the internal and external economic situations that impact the sector. As informed by Cade after the renegotiation, the schedule is of restricted access to the parties so as not to harm the company’s negotiations.

The refinery closest to having its sale concluded is the Manaus refinery, which received the green light from Cade. The case is in the administrative court of the antitrust authority.

In addition, Petrobras faces problems in the only refinery sale that received final authorization from Cade — RLAM, in Bahia. The municipality opened an investigation into the asset, which today belongs to the Mubadala fund, of the United Arab Emirates. The opening request was made by Lima and had the unanimous approval of the administrative court.

The investigation will be handled by CADE’s first instance, the General Superintendency, and will have two fronts. In the first case, the possible culprit is the refinery, which is charging more for fuel sold in Bahia (where it has a monopoly) than in other states (where there are competitors).

In the second, the investigation will be about Petrobras. The suspicion is that the state-owned company would be selling more expensive fuel to the privatized refinery than to those that are still its own.

“The signal that we want to give is that Cade is attentive at both ends. We are committed to carrying the agreement through to the end with the sale of the eight refineries and we have to be aware that we are not simply creating a private monopoly. We will continue to monitor the sector”, explained Lima.

Acelen, the parent company of the RLAM refinery, said in a statement that it “has a transparent, competitive pricing policy approved by the sector’s regulatory agency.” “Such a policy, of course, considers, among other factors, the economic reality of each location.”

The company also stated that “it will contribute to the investigation of Cade in everything possible, including the discussion of structural issues in the sector that still need to be worked on in order to reach an effectively competitive market”.

The delay in the sale of assets is observed after President Jair Bolsonaro changed the presidency of Petrobras three times during his term, with the last two taking place in the last 45 days. On April 14, José Mauro Ferreira Coelho took over the position replacing Joaquim Silva e Luna.

Just over a month later, on May 23, the president announced that Coelho would be replaced by Caio Mário Paes de Andrade, now at the Ministry of Economy. Behind the changes is the federal government’s dissatisfaction with the price of gasoline, whose price in Brazil follows international prices.

Sought, Petrobras denied that the changes in the presidency are impacting the asset sale program and points out that, since March this year, 22 material facts involving transactions have been published.

Some of them, however, refer to different stages of the same negotiation and only two are for refinery sales — Manaus and Lubnor, in Ceará. “The company’s Portfolio Management moves follow its normal course of business”, informed the oil company.

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