Lula celebrates expansion of Abreu e Lima, symbol of corruption and waste

President Luiz Inácio Lula da Silva (PT) participates this Thursday (18) in Petrobras’ “resumption of investments” ceremony at the Abreu e Lima Refinery, in Ipojuca, in the metropolitan region of Recife. The event marks the return of the state-owned company’s billion-dollar disbursements in the refining sector, a movement that is accompanied by the commitment to recover units privatized under the government of Jair Bolsonaro (PL).

Neither Petrobras nor the government say how much will be applied. They only say that the works are part of the US$ 17 billion budget approved by the state-owned company for the areas of refining, marketing and logistics over the next five years.

The first refinery built in the country since the beginning of the 1980s, Abreu e Lima is one of the symbols of the ideal of state gigantism that marked the PT’s administration in the Presidency of the Republic. It was dubbed the “most expensive refinery in the world” due to successive billion-dollar budget overruns. He suffered a “default” from Hugo Chávez’s Venezuela, who abandoned society without paying a penny and left all the expenses to Brazil. And he also gained fame with the revelation, by the Lava Jato operation, of an overpricing and bribery scheme during the construction of the unit’s so-called “Train 1”.

Lula’s visit, despite the refinery’s history of problems, is part of a strategy to strengthen ties with voters in the Northeast as municipal elections approach.

This week, the PT member passes through Bahia, Pernambuco – his home state – and Ceará. Then, throughout the first semester, he must visit all states in the country. The tour includes resumption ceremonies and delivery of works to give a platform to PT pre-candidates and allies.

This Thursday’s event can also be read as a kind of response to Lava Jato. Lula himself was convicted as part of the operation, in a decision that was later reversed by the Federal Supreme Court (STF). On several occasions, he and his party sought to link the country’s economic collapse during the Dilma Rousseff (PT) government to the investigation, which interrupted or reduced the activities of a series of construction companies.

Cost of Abreu e Lima jumped from US$2 billion to more than US$18 billion

The refinery has been in operation since the end of 2014, with only part of the planned capacity. Instead of 200,000 barrels a day, as projected, it can produce around 100,000, since the corruption scandal and budget overrun led Petrobras to interrupt work on the rest of the unit. They will now be resumed, after the failure of the Bolsonaro government in its attempt to privatize the unit.

Abreu e Lima’s initial project envisaged investments of US$2 billion, but when work began in 2007, the cost had already doubled. In total, it has already consumed at least US$18.5 billion, not counting new works.

Problem alerts abounded. In 2008, at the beginning of construction, the Federal Audit Court (TCU) identified signs of overbilling, demanding accountability from Petrobras. Then, in 2010, he recommended that work be halted during the processing of the following year’s budget law. The measure was accepted by Congress but vetoed by Lula, who went on to state that the court intended to “paralyze the country”.

In 2014, Lava Jato began to uncover a series of irregularities in Petrobras contracts. The Pernambuco refinery was investigated further in the 20th phase of the operation, in November 2015, under suspicion of corruption and embezzlement.

Several actions related to the work are being processed in court. In 2021, the then judge of the 13th Federal Court of Curitiba, Luiz Antônio Bonat, sentenced five people for crimes of corruption and money laundering in contracts signed for the construction of Abreu e Lima between 2009 and 2014.

Abreu e Lima capacity will more than double, says Petrobras

Petrobras had been reducing its operations in the refining area in recent years, not only because it was unprofitable compared to oil production, but also due to the imposition of an agreement signed in 2019 with the Administrative Council for Economic Defense (Cade). In the Cessation Commitment Term (TCC), the state-owned company committed to selling eight refineries, including the one in Pernambuco, in order to stimulate competition.

The current management of Petrobras, however, intends to change this agreement and has taken great steps to expand its operations in the area. The billion-dollar investments, according to the government, serve to make the country self-sufficient in fuel production, reducing the need for imports.

“Considering all the planned adaptation projects and the improvement of the industrial park and the supply and logistics chain, Petrobras estimates an increase in diesel production of around 40% in the coming years”, said in a statement the president of Petrobras, Jean Paul Prates, who accompanies President Lula this afternoon.

The expansion of Abreu e Lima is foreseen in Petrobras’ Strategic Plan 2024-28+ and is part of the New Growth Acceleration Program (PAC).

According to the state-owned company, the expansion of Train 1 should be completed in the first quarter of 2025, which will provide “increased load, better flow of light products and greater pre-salt oil processing capacity.”

The construction of Train 2, according to the company, is in the contracting phase. This work should begin in the second half of this year and be ready in 2028, says Petrobras. If expectations are confirmed, Abreu e Lima will have the capacity to process 260,000 barrels of oil per day, more than double the current 100,000 barrels.

According to the government, the works should generate around 30 thousand direct and indirect jobs and provide an increase of 13 million liters per day in the national production of S10 diesel.

The unit, which currently accounts for 6% of the country’s diesel production, will now be responsible for around 10%, said the unit’s general manager, Márcio Maia, at a press conference on Wednesday (17).

The project also foresees the construction of the first “SNOX” unit in the Brazilian refining park, which will be responsible for transforming sulfur oxide (SOx) and nitrogen oxide (NOx) into a new product. Work on this unit is already underway and operations should begin in 2024, according to the state-owned company.