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Petrobras To Maintain Lead in Oil Refining in Brazil Even After the Divestment

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Petrobras will maintain its lead in the refining market even after completing its plan to sell eight refineries, which provides for the transfer of assets to buyers by 2021, the executive director said of the company’s Refining and Natural Gas, Anelise Quintao Lara, in a letter to employees seen by Reuters.

Petrobras announced on April 26 a plan to sell eight refineries in Brazil, which could raise up to $20 billion, according to a company source.

Together, the refineries to be traded by the state oil company, all outside the states of Rio de Janeiro and Sao Paulo, add up to a total capacity of 1.1 million barrels of oil per day, or half the refining capacity of the company.

“I would like to emphasize that the refining activity remains strategic for Petrobras, and we do not intend to carry out further divestment activities in this sector beyond the one we are now announcing,” Anelise said in the letter published Friday night in the company’s internal channel.

“Petrobras has technologies, processes, and people highly qualified and experienced, which will allow the company to maintain its leading position in the segment, even after the entry of new companies in the refining, as occurred with the area of ​​E & P (Exploration and production ) in Brazil, “he added.

The executive said the official disclosure of divestment will occur at the end of the first half, with “subsequent steps” between the second half of this year and the first half of 2020.

“After that, the refineries, whose negotiation is successful, will be separated from our refining plant and will become independent companies. The transfer phase of the operation and the closing of the business will be initiated, which should occur in 2021, “he explained.

According to the director, after the sale of each refinery, there will be a transition period, the duration of which will be negotiated, until the complete transfer of the operation to the buyer.

In the midst of this process, he added, Petrobras plans to offer “a menu of options” to refining employees, who should be impacted by the divestment.

“There is already a Voluntary Termination Program (PDV) announced by the company and other options will also arise, such as internal relocation, according to the company’s interest, termination plan via agreement, and there is also the possibility of the employee migrate to the new refining companies which will be constituted, “he said.

In the letter, the director also defended that “refining divestitures will pave the way for a more sustainable Petrobras” and said it will visit all refineries in the coming weeks to discuss results, plans, and strategies for the future.

The refining assets included in the disinvestment program are Abreu e Lima (Rnest), Shale Industrialization Unit (Six), Landulpho Alves Refinery (Rlam), Gabriel Passos Refinery (Regap), Presidente Getúlio Vargas Refinery (Repar), Alberto Refinery Pasqualini (Refap), Isaac Sabbá Refinery (Reman) and Northeastern Petroleum Lubricants and Derivatives (Lubnor).

Analysts and industry experts say that while divestitures help Petrobras sustain its finances, they may fail to create a competitive refining market in Brazil as the country’s main markets will remain in the hands of the company.