Petrobras will spend up to R$8 billion to complete the refinery involved in Lava Jato

Rio de Janeiro – RJ) – Completing the works at the Abreu e Lima refinery, in Pernambuco, will cost Petrobras between R$6 billion and R$8 billion, said this Thursday (18) the president of the state-owned company, Jean Paul Prates. The final value, he said, still depends on the conclusion of the tenders.

The resumption of works was celebrated in a ceremony in the presence of President Luiz Inácio Lula da Silva (PT), who started the project during his first term, through a failed partnership with the then Venezuelan leader Hugo Chávez.

The Abreu e Lima works were halted in 2015, after the discovery of the corruption scheme investigated by Operation Lava Jato. To date, Petrobras has spent around US$18 billion (R$90 billion, at current prices) on the project.

The estimated final value represents almost ten times the original budget, of US$2.4 billion (R$12 billion).

At this Thursday’s ceremony, Prates defended the investment saying that the refinery will have revenue equivalent to its cost in the first year of full operation, which is expected for 2028. The company says that the project is viable and will have a positive profit margin.

The resumption of works begins with expanding the capacity of the refinery’s first unit, which was inaugurated in 2014. This contract has already been signed with the construction company Engecampo, worth R$91.7 million.

Afterwards, Petrobras will complete the second unit. At the end of the process, oil processing capacity will rise from the current 100,000 to 260,000 barrels per day, with a focus on diesel production, a fuel in which Brazil is deficient.

Prates said that the refinery will process diesel using vegetable inputs, a technology that has been tested by the state-owned company in other refineries. Therefore, he stated, it will survive beyond the era of fossil fuels, increasingly under pressure in the face of the climate emergency.

“This is a hundred-year-old refinery, it’s a refinery for after the oil runs out,” he said. “This doesn’t make fossil fuel, it makes liquid energy. Today, the most accessible for the population and the least labor intensive to produce is hydrocarbon, but it will produce hydrogen, it will produce renewable diesel.”

“This is a hundred-year-old refinery, it’s a refinery for after the oil runs out,”

said Jean Paul Prates, president of Petrobras.

With works beginning in 2005 and a three-year delay in the start of operations in its first phase, Abreu e Lima would have participation from the Venezuelan state-owned company PDVSA, but the negotiations did not go through.

This Thursday, Lula recalled conversations with Chávez at the time.

“Chávez was one of the most enthusiastic people in the world, he never said no,” said the president. “He always said yes, even if he wasn’t going to do it later.” Venezuela’s exit from the business, he said, ended up being beneficial by reducing investment.

“To build a refinery with Venezuela, we had to build almost two refineries. So, we ended up building our refinery on our own and I can say, thank God, we are going to build our refinery, because we can make do with our mistakes and our successes.”

Lula also questioned the stoppage of works, amid criticism of Operation Lava Jato. “Imagine how much money Brazil lost with these ten years of work being stopped,” she said, recalling Prates’ statement about the unit’s expected revenue.

“Chávez was one of the most enthusiastic people in the world, he never said no,”

said Luiz Inácio Lula da Silva about Venezuelan leader Hugo Chávez.

The Federal Court of Auditors (TCU), however, understands that the work is an example of “how a virtuous and promising idea can turn into a billion-dollar commercial failure”, according to a notebook about the project launched in 2021.

In it, Minister Benjamin Zymler wrote that the project subverted a sophisticated governance system “to the point of entangling the entire senior management of a renowned company —even if unintentionally— in a daring scheme of corruption and misappropriation of resources.”

Petrobras tried to sell the refinery during the Michel Temer and Jair Bolsonaro governments, but decided to resume work in 2022, claiming that it would improve the unit’s attractiveness for foreign investors.

After Lula takes office, the strategy is to reinforce investments in refining.

In its first strategic planning under PT management, Petrobras predicted US$17 billion in refining for the next five years.

In addition to Abreu e Lima, the company intends to resume work on the former Rio de Janeiro Petrochemical Complex (Comperj), another target of Lava Jato.

*With information from Folha de S.Paulo

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