Brazil Court Orders Halt to Refineries Sale

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Brazil’s top court ordered a temporary halt this week to efforts to divest eight refineries owned by national oil company Petrobras, while it considers a request by legislators to block the sales.

The Supreme Federal Court stated Monday that it will finish voting by Friday whether to grant a request by the Federal Senate, which contends that the initiative by President Jair Bolsonaro’s administration is invalid because it was undertaken without analysis by the National Congress.

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Bolsonaro’s administration announced last year that it planned to sell the eight refineries – which constitute approximately half of the nation’s refining capacity – to raise money and to make the industry more competitive.

By Monday, three of the court’s 12 judges had voted to halt the sales.

Two of the facilities make base oils. The Landulpho Alves fuels refinery in Mataripe has a plant with capacity to make 1,750 barrels per day of API Group I base stocks, and Lubrificantes e Derivados do Nordeste is a naphthenic base oil plant in Fortaleza with production capacity of 1,290 b/d.

Petrobras, which is owned by the government, is already in exclusive talks with United Arab Emirates investment fund Mubadala for sale of the Mataripe refinery. Petrobras is waiting for companies interested in Lubnor to refine their bids in light of the COVID-19 pandemic. In July Petrobras said it expected the Lubnor sale to be completed next year.

Petrobras currently owns all of the virgin base oil capacity in Brazil. A private company operates the lone rerefinery.

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