Petrobras Updates on Lubnor, GasLub

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Brazil’s state-owned oil company said last week that it still intends to move forward with two initiatives that would alter the country’s base oil supply base – the sale of its Lubnor refinery and construction of an API Group II base oil plant – though the projects appear hardly advanced in the past year.

In comments reported by local news journal Negocios, Petrobras Chief Executive Officer Joaquim Silva e Luna told Brazil’s Senate that the company is still negotiating to sell the Lubricants and Petroleum Derivatives of the Northeast refinery in Fortaleza but that it will not meet an end-of-the-year deadline to sell that facility or several other refineries.

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Petrobras has said previously that efforts to divest those refineries – begun in 2018 – were delayed since mid-2020 by the COVID-19 pandemic. Bidders who had already submitted binding offers for the refineries sought permission to resubmit saying the pandemic had affected their financing plans.

In late 2020, Petrobras said it expected to complete the sale of all eight refineries during 2021.

Silva e Luna noted that Petrobras has scrapped negotiations with bidders for two refineries but did not say if the company plans to seek new bids. Likewise he did not address whether the company needs or intends to seek permission to extend negotiations for Lubnor or one other facility that is subject to ongoing talks.

The company has already reached agreements to sell two of the eight refineries – the Refinery Landulpho Alves in Sao Francisco do Conde and the Refinery Isaac Sabba in Manaus. Investment firm Mubadala has agreed to buy the Landulpho Alves facility, which has a Group I base oil plant with capacity of 11,200 b/d. Lubnor has capacity to make 1,290 b/d of naphthenic base oils.

On Nov. 24, Petrobras unveiled plans to invest U.S. $68 billion over the next five years on several capital projects including integrating the Itaborai GasLub project with the existing Duque de Caxias refinery and to build a Group II plant at the former facility. Formerly known as Comperj, GasLub is a massive natural gas processing project under construction since 2008 but long delayed by investigations that found bribes had been taken for some of its contracts.

Petrobras is now seeking partners to help finance the remaining work. A year ago the company said it would spend $490 million on a catalytic hydrocracker that would help make Group II oils. At that time the company did not disclose a timeline for the base oil project.

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