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 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% stake in BR Distribuidora, said it is evaluating a secondary share offering to reduce its stake in that business. Apparently Petrobras could reduce its stake in BR to as low as 40%.
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 Lula da Silva and Hugo Chavez, the unit had successive cost overruns that led to total capital expenditure of around US$20 billion from an initial estimate of US$2.3 billion. Venezuela's PDVSA later abandoned the project, that was partially concluded in 2014.
In related news Brazil's economy minister Paulo Guedes said that even when the Brazilian government is not currently considering privatizing Petrobras, President Bolsonaro has shown openness to the idea for the first time.
Addressing reporters after meeting with Argentine Finance Minister Nicólas Dujovne, minister Guedes added that he is working on a program to make domestic natural gas cheaper, which should result in a downward price “shock” in 30 to 60 days.
Earlier in April, Bolsonaro said he had “initial sympathy” for the idea of privatizing Petrobras, as the firm is known, a shift in tone from prior statements.