With Petrobras Divestments and New Projects, New Refineries May Emerge in Brazil in 2021

Divestments by Petrobras and Projects Built from Scratch Will Bring Significant Changes to Brazilian Refineries in 2021

In 2021, Brazil’s refinery sector may see several companies emerging in the market. This move may be influenced by the divestments of the state-owned Petrobras and also through the advancement of projects built from the ground up, aimed at serving local markets.

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Executives in the sector say that closing the licensing this year and managing to finalize the financial equation of the projects, even in times of economic contraction – despite their small scale – will require billions of reais.

Specialized oil refining companies, Oil Group, Noxis Energy, and Enerney Plataform, have modular projects in their portfolio that could reach at least 400,000 barrels per day – 16% of the authorized capacity of the national park. With the decline of the monopoly, the business environment the company is betting on is more conducive to attracting investors.

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Sales of Petrobras Refineries:

Ultrapar Group, a Brazilian company operating in the fuel distribution sector, is in negotiations to acquire the Alberto Pasqualini refinery (Refap/RS), and the transaction price may increase from US$ 1.2 billion to US$ 1.4 billion.

The Landulpho Alves refinery (Rlam/BA) may be acquired by the Emirati state holding company, Mubadala.

Raízen, which operates in the sugar and ethanol production, fuel distribution, and energy generation sectors, along with the Essar Group, an Indian conglomerate, and the Chinese Sinopec, may be interested in purchasing some of the assets from the state-owned divestment plan.

Marcus D’Elia, managing partner of the consulting firm Leggio, believes that the small refineries’ projects will gradually increase their strength with the inaugurations of new refineries. According to him, during the transition period, investors will naturally be more cautious. “The market opening will significantly affect the pricing of derivatives, which influences the viability of the projects. But I see this type of project having potential to attract investors, given there is a well-structured business model.”