April 13 (Reuters) – Brazilian state-run oil firm Petrobras is in initial direct negotiations with Abu Dhabi’s Mubadala sovereign wealth fund to repurchase the Mataripe refinery in Brazil, two sources with knowledge of the matter told Reuters on Monday.
President Luiz Inacio Lula da Silva said last month that Petrobras would repurchase the refinery, which had been sold during the administration of his predecessor Jair Bolsonaro. After Lula’s remarks, Petrobras had said it would analyze a potential deal.
A deal could be inked by the end of this year, the sources said. Mataripe is Brazil’s second largest refinery, but is operating at only around 60% of capacity, while Petrobras’ plants are operating at their limit in order to boost local production, one source said.
Petrobras’ plans to increase refining capacity have gained fresh urgency after the U.S.-Israel conflict with Iran caused global diesel prices to surge, impacting Brazilian consumers due to the country’s dependency on foreign diesel. Brazil imports about a quarter of its total diesel needs.
The rise in fuel prices has become a major concern for Lula ahead of a presidential election in October, where he will seek a fourth non-consecutive term.
Petrobras did not immediately comment. Mubadala declined to comment.
Brazil Energy Insight 
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