Employees Threaten Strike After Petrobras Refinery Sale in Bahia for Half Its Value, According to Ineep

Rlam in Bahia Is One of the Eight Refineries Petrobras Put Up for Sale, Which Together Represent About Half of Brazil’s Fuel Production Capacity

Mubadala Capital won the bidding for the Landulpho Alves Refinery (Rlam), owned by Petrobras in Bahia, with an offer of US$ 1.65 billion, the state-owned oil company announced in a relevant fact this Monday, marking the first conclusion for the sale of a refinery announced by the company.

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Petrobras Refinery in Bahia Is Being Sold for Half Its Value, Says Ineep

According to the Institute of Strategic Studies for Oil, Natural Gas, and Biofuels (Ineep), Petrobras’ Rlam is being sold for half its value, which, at current exchange rates, would range between US$ 3 billion and US$ 4 billion. To arrive at this value, Ineep used the Discounted Cash Flow (DCF) method, which is based on the present value of future cash flows. From the result, the rate reflecting business risk, capital expenditures (fixed capital investment), and additional working capital needs are deducted.

“The data reveals that Rlam has significant future cash generation potential that, depending on the assumptions used, may be undervalued at this time of sale,” says Rodrigo Leão, technical coordinator at Ineep.

Together with Rlam, 669 kilometers of pipelines are being sold, linking the refinery to the Camaçari Petrochemical Complex and to the Madre de Deus Terminal, which is also included in the package along with three other terminals in Bahia (Candeias, Jequié, and Itabuna).

Oil Workers Outraged by Petrobras’ Decision

The oil workers’ category received the announcement of the completion of the Rlam sale “with a mix of outrage and sadness.” But the workers will not remain idle. At a meeting, they had already decided to go on strike if there was progress in sales negotiations for Rlam. According to the leadership of Sindipetro Bahia, the strike movement is being organized and could happen at any moment.

The purchase and sale contract signing is still subject to the approval of the competent authorities, but “the consequences of the sale of Rlam can already be anticipated, and they will not be good for consumers and for the country,” says Jairo Batista, coordinator of Sindipetro Bahia. “The sale will impact the economy of Bahia and the municipalities surrounding Rlam, as well as reduce investment levels, employment, and workers’ rights.”