Lula government wants privatized refineries back under Bolsonaro administration

The federal government wants back the Petrobras refineries that were privatized under the previous government. Of the 13, three were sold during the administration of former president Jair Bolsonaro and one had its sale suspended at the last minute. The idea, according to the Ministry of Mines and Energy, is to expand the refining and petrochemical chain and strengthen the guarantee of national supply and reduce external dependence.

“The Ministry of Mines and Energy (MME) informs that it supports the interruption of the divestment policy and the repurchase of refineries. Although it is a decision to be taken by Petrobras, the MME understands that the repurchase of refineries and expansion of the Brazilian refining park is essential within the scope of the National Energy Policy”.

Asked if there is interest in other refineries, which ones they would be and why, Petrobras informed People’s Gazette which “will not comment” on these issues. A The company has ten 100% Petrobras refineries and the Rio Grandense Refinery (RPR), which is a partnership with Ultra and Braskem, where Petrobras has a third stake.

The president of the state-owned company, Jean Paul Prates, however, confirmed on the 5th that Petrobras is negotiating a stake in the Landulfo Alves Refinery (RLAM), in Bahia, renamed the Mataripe Refinery. The plant was purchased by Mubadala Capital, a sovereign wealth fund of the United Arab Emirates, in November 2021. According to the Brazilian Infrastructure Center (CBIE), it represents 15% of Petrobras’ refining capacity.

Prates stated that the sale of RLAM is the subject of an internal investigation at the state-owned company and is being discussed with the control body. The unit was sold for US$1.65 billion (around R$8 billion at current exchange rates), a value considered below market by an audit by the Federal Comptroller General (CGU).

The report did not categorically state that there was an economic loss with the sale of the refinery. But he questioned the timing of the deal, during the pandemic, when international oil prices were low, arguing that Petrobras could have expected an improvement in the international market.

Which refineries were privatized during the Bolsonaro administration

During the Bolsonaro government, in addition to RLAM, Reman, from Manaus, was sold to Atem’s Distribuidora de Petróleo SA (Atem), and Polo Potiguar, which includes the Clara Camarão Refinery, in Rio Grande do Norte, to 3R Petroleum.

Lubrificantes e Derivados de Petróleo do Nordeste in Ceará (Lubnor) was sold to the Grepar group in May 2022, in an operation authorized by the Administrative Council for Economic Defense (Cade) in June 2023. However, Petrobras went back and canceled the deal in November 2023.

The president of the private group, Clovis Fernando Greca, promises to demand compensation in court and says he will take money from Brazil.

“The former government’s refining strategy was to concentrate the refineries in the state of São Paulo and release the others to the private market, but it was unable to complete. The current government’s strategy is to nationalize. There are two antagonistic and indirect price control theses. I’m not defending any. The problem is staying in the middle of the road as it is now”, says Armando Cavanha, oil and gas consultant and professor at PUC-Rio.

Adriano Pires, director of the CBIE, argues that the rules should not change with changes in government, and maintains that the Administrative Council for Economic Defense (Cade) should remain independent, so that investors feel safe in Brazil.

“This back and forth creates a bad scenario of regulatory destabilization and legal uncertainty. In 2019, Cade signed a TCC [Termo de Compromisso de Cessação] with Petrobras to have more players in refining and gas and, thus, be more competitive and de-verticalize the chain. Now the government changes and Cade will change his mind and think that monopoly is good?”, asks the expert.

“This worries us, as it generates discredit among good investors, because the amortization of this type of investment is long-term. It means that every time the government changes, everything changes and they have no assurance of what will happen”, he adds. Saucer.

For the Bolsonaro government, selling the refineries would improve competition. However, the refinery in Amazonas, privatized in 2022, currently has the most expensive gas cylinder in the country. On the other hand, nationalization brings to the memory of investors and the market the history of political interference in Petrobras in previous PT administrations, in addition, of course, to the corruption scandal uncovered by Operation Lava Jato.

The best way is for the market itself to control the price and build more refineries, says Cavanha. “We have few refineries for such a large country. Instead of repurchasing, more would need to be done. The United States has more than 120 and China has 32, all of which are giants.”

Petrobras intends to invest US$10 billion in refineries by 2028

According to Petrobras’ investment plan for the period 2024-2028, of a total disbursement of US$ 102 billion, US$ 73 billion is aimed at oil exploration and production and US$ 17 billion, for refining, transportation and commercialization. .

The company does not detail the composition of this US$ 17 billion, but informs that only for refineries the forecast is US$ 10 billion in investments.

According to Petrobras, the expansion takes into account both the increase in biofuel production and the oil processing capacity of existing refineries.

“The investments will be applied to increase operational reliability through maintenance stops, increase the quality of diesel, increase the processing capacity of existing refineries and the production of biofuels”, says the company.