April 27, 2019
By Marcelo Teixeira
SAO PAULO (Reuters) – Brazil’s state-controlled oil company Petrobras on Friday for the first time detailed long-awaited plans to sell a series of refineries and other assets as the company focuses on its core oil and gas exploration business.
Petrobras, or Petroleo Brasileiro SA, said its board had approved a plan to sell eight refineries in Brazil, including its large, recently built Abreu e Lima unit, according to a securities filing.
The company also said it will sell a gas station chain in Uruguay, called PUDSA, and an additional stake in Brazil’s No. 1 fuel distribution company BR Distribuidora SA as part of a massive divestment drive that aims to cut debt and raise money to be invested in its core oil exploration area.
Petrobras, which currently has a 71 percent stake in BR Distribuidora, said it is evaluating a secondary share offering to reduce its stake in that business.
A source with direct knowledge of the decisions taken by the board told Reuters earlier on Friday that the oil company could reduce its stake in BR to as low as 40 percent.
Petrobras said that among the other refining assets to be put up for sale are its Gabriel Passos unit, located in central Minas Gerais state, the Getúlio Vargas refinery, in southern Paraná state and the Landulpho Alves unit, in northern Bahia state, one of the largest refineries in the country with capacity to process 323,000 barrels per day.
The Abreu e Lima unit is emblematic. Launched in 2005 as a joint project for Brazil and Venezuela, in a collaboration of the leftist governments of Luiz Inácio Lula da Silva and Hugo Chavez, the unit had successive cost overruns that led to total capital expenditure of around $20 billion from an initial estimate of $2.3 billion.
Venezuela’s PDVSA later abandoned the project, that was partially concluded in 2014.
(Reporting by Marcelo Teixeira; Editing by Christian Plumb and Sandra Maler)