Mubadala Arab Fund That Purchased Rlam from Petrobras Offers to Buy Brazilian Oil for Refinery in Bahia

Petrobras President Said During Public Hearing at the Chamber of Deputies About the Sales of Assets of the Oil Company That the Mubadala Fund Signaled Interest in Buying National Origin Oil

On June 25, there was a public hearing at the Chamber of Deputies about the sales of assets of the oil company. At the meeting, the new president of Petrobras, Joaquim Silva e Luna, stated that the Arab fund Mubadala, which purchased the Landulpho Alves refinery (Rlam) in Bahia, offered to buy Brazilian oil as raw material for the northeastern refinery. “[Mubadala] has already expressed willingness to buy Brazilian oil,” said Silva e Luna.

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The two companies are finalizing the sale of the refinery for $1.65 billion nearly a year after they started exclusive negotiations for the asset amidst uncertainty in the oil market caused by the Covid-19 pandemic.

Rlam Is the First Refinery Sold in Petrobras’ Downstream Divestment Portfolio

The Administrative Council for Economic Defense (Cade) approved the historic transaction earlier this month.

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Rlam is the first refinery sold in Petrobras’ downstream divestment portfolio, and represents half of the domestic processing capacity of 2.2 million b/d.

Short-term service and supply contracts are likely for the seven other refineries that Petrobras intends to sell by the end of the year, company executives told Argus. However, with other domestic oil suppliers in the market, such as Shell and Galp, Petrobras will have more oil available for export in the coming years.

Petrobras expects its export portfolio to increase from 445,000 b/d in 2015-19 to 891,000 b/d in 2021-25, reflecting the increase in pre-salt production and downstream divestments.

Union Questions the Sale Price of Rlam

Despite various legal setbacks, oil workers’ unions and opposition politicians continue to question the sale price of Rlam. Unions represented by the Unified Federation of Oil Workers (FUP) attempted to block the sales of the refineries and pressure Petrobras to abandon its market-based price policy that supports the sale of the refineries. Such pressure is expected to increase as Brazil approaches the elections at the end of next year.

At last week’s hearing, Silva e Luna reiterated that the company does not intend to abandon price parity with imports, and emphasized that the country depends on fuel imports. When President Jair Bolsonaro appointed Silva e Luna in mid-February, investors feared federal government interference in pricing policy, a possibility that he dismissed.

The retired general and former Defense Minister stated that the sale of the refineries, as part of the state’s $25 billion-$35 billion divestment portfolio, will help finance pre-salt oil production and exploration campaigns in the border basins in the north of the country.

Mubadala Takes Over Billion-Dollar Debt of Invepar and Begins to Control the Subway in Rio de Janeiro

Mubadala, an investment fund from the United Arab Emirates, will take control of the Metroviária Concessionaire of Rio de Janeiro, MetrôRio, replacing Invepar. The process authorizing the transfer, signed by Governor Cláudio Castro, was published on the last day 11 in the Official Gazette of Rio de Janeiro.

The Rio de Janeiro subway was previously under the control of Investimentos e Participações em Infraestrutura S.A (Invepar), the majority shareholder of São Paulo International Airport in Guarulhos.

According to Globo columnist Ancelmo Gois, the Arab fund helped restructure Invepar’s R$ 2.5 billion debt in September. In return, it was agreed that Invepar would waive the concession of the subway and the Yellow Line.

However, in the case of the Yellow Line, authorization from the City Hall of Rio and the STF is needed, where the case ended up after former mayor Crivella attempted to take over the toll of the road.

Invepar, which will now focus on Guarulhos Airport, went into crisis with OAS’s problems, which had to leave the partnership after the Lava Jato scandal, leaving it in the hands of a group of pension funds.

Odebrecht Works on the Sale of Petrochemical Braskem to the Sovereign Fund of the United Arab Emirates

The petrochemical Braskem, part of the Novonor Group – formerly Odebrecht, is in the sights of acquisition by the sovereign fund of the United Arab Emirates, Mubadala. The negotiations involve the purchase of 50.1% of the company that is part of the judicial recovery plan of Odebrecht/Novonor.

Petrobras, which owns the remaining Braskem, seems not to oppose the deal. According to Broadcast Estadão, it is still expected that other interested parties will come into play, such as Dutch LyondellBasell, which may resume negotiations for a stake in Braskem. 

Braskem is the largest producer of thermoplastic resins in the Americas, with an annual volume exceeding 20 million tons, including the production of other basic chemical and petrochemical products. The company operates 41 industrial units located in Brazil, the U.S., Germany, and Mexico, the latter in partnership with the Mexican Idesa.