Petrobras Fails in Sale of Fertilizer Plant (With Construction Stopped Since 2014) to Russian Group Acron, and Multinational Unigel Joins UFN3 Bidding Process

Operation of UFN3, Which Had Projected Capacity by Petrobras of 3,600 Tons/Day of Urea and 2,200 Tons/Day of Ammonia, Could Help Brazil Reduce Dependence on Imported Product While the Country Faces Challenges from the War Between Ukraine and Russia.

Petrobras announced in a significant fact to the market on April 28, that the sale process of the Nitrogen Fertilizers Unit III (UFN-III), in the municipality of Três Lagoas, with the Russian group Acron was not completed, “considering that the business plan proposed by the potential buyer, as a substitute for the original project, prevented certain government approvals that were necessary for the continuity of the transaction”.

According to the communication made by the oil company, “the company is carrying out internal procedures to close the current sale process and preparing to launch a new teaser as soon as possible. The forecast is to launch the new process as early as June. Petrobras reiterates its commitment to the broad transparency of its divestment projects and the management of its portfolio and informs that subsequent steps of the project will be disclosed according to the company’s Divestment System”.

After Petrobras issued the statement, Secretary Jaime Verruck of Semagro (Secretary of Environment, Economic Development, Production, and Family Agriculture of MS) clarified that in the last three months, the Government of MS intensified discussions with representatives of the Acron group in Brazil to continue the sale process of UFN3, in Três Lagoas. “The Semagro and Sefaz teams systematically met with Acron’s management, and there was a presentation of the company’s business plan. However, this business plan only provided for the installation of a fertilizer blender,” he reported.

According to Verruck, “the State Government understood that this business plan was not suitable, as it did not meet the needs of the industrial policy of Mato Grosso do Sul and the needs of Brazilian industrial policy, which is to have a production unit for fertilizers and nitrogenous products. Thus, we rejected Acron’s business plan.”

The construction of UFN3 was halted in December 2014, with about 80% of the work completed, after Petrobras terminated the contract with the consortium responsible for building the factory, which had already consumed over R$ 3 billion at the time.

One of the Largest Petrochemicals in Latin America Interested in Buying UFN3

Petrobras’ fertilizer factory is already on the radar of new companies. Aiming to expand its operations in the sector, Unigel, one of the largest petrochemicals in the production of nitrogen fertilizers in Latin America, is interested in purchasing the project designed to produce urea and ammonia, aiming to expand its operations in the sector. This information was confirmed by the CEO to Reuters.

The operation of the unit, which had a projected capacity by Petrobras of 3,600 tons/day of urea and 2,200 tons/day of ammonia, could help Brazil reduce its dependence on imported products while the country faces challenges from the war between Ukraine and Russia.

“The company already invests in fertilizers in Brazil and is interested in completing the UFN-III and seize 50% of the fertilizer market”, emphasized one of Reuters’ sources.

Unigel has more than 2.9 million tons of installed capacity, being 925,000 tons of ammonia, 1.125 million tons of urea, and 670,000 tons of ammonium sulfate, according to company information.