Petrobras Partnership with the Chinese at Comperj Is at Risk

Divestment Plans in the Refining Sector Cause Petrobras to Reevaluate Agreement with the Chinese on Comperj Works

The agreement signed in October last year between Petrobras and the Chinese CNPC for the construction of the Comperj refinery in Itaboraí (RJ) is at serious risk of being misaligned with the line of reasoning of the president of the Brazilian state-owned company.
It is known internally that the new model to be adopted is one of divestments and reduced participation in the refining sector, and the pre-agreement with the Chinese, signed under the management of former company presidents, Pedro Parente and Ivan Monteiro, is now at odds with what the current president, Roberto Castello Branco, believes.

Under the agreement with the Chinese, CNPC would hold 20% of the joint venture to be formed for the completion and operation of the first train (module) of the Comperj refinery, which will have a capacity to process 165,000 barrels/day of oil.
To date, the definitive agreement for the partnership has not been defined due to feasibility and planning studies that have been dragging on since July 2017.

Roberto Castello Branco has already stated that he does not intend to sell small stakes in the refineries and that his view is that if he sells, he will sell 100%.
The original divestment project from the previous management of Pedro Parente provided for the sale of 60% of the regional hubs in the South and Northeast, but this will also be reviewed by the current president, who does not agree with that viewpoint and wants to define the new model still this semester.

The Comperj

On Monday (03/18) the president of the State-Owned Company and the governor of the state of Rio de Janeiro, Wilson Witzel, met to combine efforts in resuming the works of Comperj, and the governor stated that he would provide all necessary support.

Upon reaching an agreement on the resumption of the Comperj works, Petrobras believes it will need an additional two years to complete the construction, which is currently 80% finished and was interrupted in 2015.

The Comperj has consumed investments on the order of US$ 13 billion, and Petrobras has conditioned the resumption of works on the entry of a partner, as it is believed that around US$ 13 billion are still needed to finalize the project.

Today, Petrobras is solely in charge of completing the (UPGN) Natural Gas Processing Unit at Comperj and has already spent around R$ 1.95 billion on the project.
Petrobras aims to earn approximately US$ 40 billion from the sale of refining assets, and the idea is to keep only 50% control of this segment.

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