Court Approves Sale of Lubnor Refinery


Court Approves Sale of Lubnor Refinery
A view of the Northeast Lubricants and Derivatives refinery – known as Lubnor – in Fortaleza, Brazil. Lubnor has a naphthenic base oil plant with production capacity of 1,290 barrels per day. Photo courtesy of Petrobras

A competition court in Brazil today approved Grepar Participacoes’ acquisition of the Lubnor refinery from Petrobras – a decision intended as the final step before the delayed closing of the transaction.

The federal Administrative Council for Economic Defense, known as Cade, added a few conditions aimed at ensuring the purchase does not harm competition in the country’s asphalt industry and instructed that the companies complete the deal within a month.

In the midst of an initiative to privatize half of its refining industry, national oil company Petrobras agreed in May of 2022 to sell the refinery to Grepar for U.S. $34 million. Cade’s superintendent approved the sale without restrictions in December. In January, however, a counselor for the court advised that the sale should be reviewed again after several asphalt companies and one lubricant marketer complained that it would harm competition.

Lubnor, formally named Refinaria Lubrificantes e Derivados do Nordeste, or Northeastern Lubricants and Derivatives Refinery, has capacity to process 10,400 barrels per day of crude oil and to produce 1,290 b/d of naphthenic base oil, along with asphalt and dark fuel oil. The base oil plant is one of three in the country and the only one producing naphthenic oils.

The refinery is one of eight that the administration of former President Jair Bolsonaro decided in 2019 should be divested by Petrobras in order to encourage competition in the refining industry and to raise money for the government. Bolsonaro’s successor, Luiz Inacio Lula da Silva, criticized the sale of government businesses but has stopped short of cancelling transactions that had already been agreed to.

Lubnor is located in Fortaleza, in the northeastern state of Ceara. It would be the fourth refinery sale to be completed. One of the other three, the Refinaria Landulpho Alves refinery in Sao Francisco do Conde, Brazil, includes a paraffinic base oil plant with capacity to make 1,750 b/d of Group I oils. That refinery was purchased by United Arab Emirates-based investment firm Mubadala, which renamed the facility Refinaria Mataripe and created subsidiary Acelen to operate it.

Cade’s decision requires Grepar to hire an employee dedicated to ensuring that interactions between its asphalt production and asphalt distribution operations don’t harm competition. It also sets restrictions for communications between officials of Grepar’s different subsidiaries.