Brazil’s state-owned Petrobras announced Monday that it had terminated the sale of the Lubnor refinery to Grepar Participacoes, claiming that government entities failed to complete a land transfer necessary for the deal to close.
The unilateral decision would nix a deal reached in May of 2022 and undo one piece of an initiative by Brazil’s previous presidency to introduce competition into the country’s energy industry.
Petrobras’ press office issued a statement implying that the company now plans to keep the refinery, formally named Refinaria Lubrificantes e Derivados do Nordeste, or Northeastern Lubricants and Derivatives Refinery, and consider upgradig it.
“With the termination, Lubnor continues to integrate the refining [infrastructure] of Petrobras, and the company will begin an analysis of investments in the unit,” a spokesman told Lube Report.
Grepar officials did not respond to questions from Lube Report, but news website Valor International reported the company saying it will seek compensation but not to reverse cancellation of the sale.
Located in the city of Fortaleza, in the northeastern state of Ceara, Lubnor is one of Brazil’s largest sources of asphalt and has overall production capacity of 8,200 barrels per day, including 1,290 b/d of naphthenic base stocks. It is one of three virgin base oil plants in Brazil and the only one making naphthenic base stocks.
Divesting Petrobras refineries was a key initiative of former President Jair Bolsonaro’s administration, which announced in 2019 that it would sell government stakes in eight of the company’s 13 refineries to encourage competition and to raise money to focus on oil exploration. Little of the plan has materialized, though, as sales have been completed on only two of the sites.
There were numerous delays – some caused by the COVID-19 pandemic – during Bolsonaro’s term in office, but his successor, Luiz Ignacio Lula da Silva, came to office in 2022 criticizing the divestment plan and vowing to pull some refineries off the sales block.
Grepar, one of Brazil’s largest asphalt companies, agreed to buy Lubnor in May of 2022 for U.S. $34 million, but closing of the deal dragged out. The municipal owned part of the site of the refinery, and opponents of the sale tried to prevent its transfer as a way of blocking the deal. Opponents also convinced a federal competition court to review its decision approving the sale. In June of this year the court again signed off on the deal, but by that time Lula was six months in office.
Grepar had said it intended to upgrade the refinery. Petrobras told Lube Report it will consider investments to the facility.