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When its works were initiated during Lula’s government, Comperj would aim to produce about 165 thousand barrels of fuel and boost distribution. Time passed, the works were halted, arrests due to Lava Jato were made, and many political events in the country interfered with the project.
The Rio de Janeiro Petrochemical Complex (Comperj), located in the municipality of Itaboraí in the metropolitan region of the state capital, is considered for its own reasons the largest action by Petrobras and one of the largest ventures in the world in the production, refining, marketing, and transportation of oil, natural gas, and their derivatives.
The project was an investment during the government of President Luiz Inácio Lula da Silva in 2008, costing around R$ 8.4 billion. Thus, Brazil began to have a large industrial complex, with the promise of improving the industrial, economic, and environmental sectors and lowering fuel prices as a direct consequence.
However, as many already know and lament, the works of Comperj were halted in 2015 with the results of the arrests of Petrobras directors and even the governor of Rio, Sérgio Cabral, through revelations from the Lava-Jato Operation that investigated corruption involving the company. The 45 km² venture ceased to be a priority for Petrobras. The result is that contracted companies, directly or indirectly, closed their doors and the dream of processing 165 thousand barrels of oil per day on site was postponed. We have seen fuel prices rising routinely until today.
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With the now President Jair Bolsonaro in command of the Palácio do Planalto, who has even changed the command of Petrobras to try to interfere in fuel pricing policy, some bidding rounds were restarted. Just before, in October 2018, under Michel Temer’s government, Petrobras began an attempt to reach an agreement with the China National Oil and Gas Exploration and Development Company (CNODC), a subsidiary of Chinese oil company CNPC, to complete the Comperj refinery. The initial agreement granted the Chinese company 20% of the refinery. Petrobras called the negotiation at that time a ‘strategic partnership’, and Lula, an encourager for the birth of the complex, stated they were almost giving Comperj away for free to the Chinese. In 2019, the negotiation ended without an agreement.
Comperj had over thirty thousand workers. Currently, only 600 are reportedly providing maintenance services on site. In 2017, despite contradicting members of his party and while enjoying the last moments of freedom, former President Lula visited the city of Itaboraí. On that occasion, Lula gathered former workers from the region and criticized what he called the abandonment of the complex. The project was conceived, in his words, as a “mixture of refinery with petrochemical industry.”
Would the Resumption of Comperj by Petrobras Be Proof That Lula Is Innocent?
A labor cause enthusiast, the former president from the Workers’ Party believes that Comperj is still important for the economic growth of that entire region. In addition to direct jobs, indirect jobs and businesses around the complex and throughout the cities of Itaboraí and São Gonçalo are envisioned. The trend, therefore, is that Lula, who had the processes regarding the tríplex cases in Guarujá (SP) and the site in Atibaia (SP) annulled and who believes that the conduct of the Lava Jato Operation was flawed, will invest in the resumption of the Comperj works if he is re-elected president in 2022.
In addition to this labor issue, it would be proof that Lula believes he is providing Brazil with is that the loss of credibility of Petrobras and the crisis in the sector affecting the entire country originated from a corrupt police operation with political tendencies. Lula wants to prove, in parallel to this possible rebirth of Comperj, that Lava Jato destroyed companies and caused unemployment for millions and that he will be able to lower fuel prices.
Investment Values for the Resumption of Comperj Are Unknowns
It is not known how much more needs to be spent for the complex to be completed. According to an analysis by specialists, more than US$ 5.3 billion (17.1 billion in Reais) is needed to finish the construction. According to the Federal Court of Accounts (TCU), the loss to Petrobras regarding Comperj is in the range of R$ 12.5 billion.
Could the Resumption of Comperj in a Possible Lula Government Lower Fuel Prices?
The Rio de Janeiro Petrochemical Complex (Comperj), a giant venture in the history of Brazil’s petrochemical sector, was designed in 2006 (foundation stone) to be the largest solution for transforming petrochemical products into consumer goods, such as: components for the automotive and home appliance industries, surgical materials, packaging, paints, among others. A true production complex of extraordinary scale.
However, over time, this optimistic scenario ceased to exist, and Comperj became a monumental center of disorder. With the halt of works in 2015, situations that negatively affected the economy of the sector were triggered. This chain reaction reached the final consumer, with fuel prices rising routinely. The question that Brazilians are asking now is: when will fuel prices stabilize?
In countries with polarized political preferences and internal production power, politics and economics go hand in hand. It is possible that former President Lula will run for office again in 2022 and has made it clear that one of his actions in the sector is to encourage the resumption of Comperj works. If the complex becomes the main player in petrochemical production, there will be a significant boost to Brazil’s Gross Domestic Product (GDP) figures. With consolidated direct production, prices at refineries should decrease and thus reach the final consumer of fuel (gasoline pumps). Currently, Comperj is reduced to the refinery and a natural gas processing unit (UPGN).
Logistics Facilitation Will Favor Fuel Prices
Although self-sufficient in oil, Brazil lacks sufficient processing capacity for the entire territory, so it must export oil and buy its derivatives, such as gasoline and diesel. If Comperj comes to be a large production complex in practice, it will solve this deficiency and truly make Brazil a reference in the sector. Production and logistics, therefore, will be internal and thus trigger the reduction of costs until they reach the consumer at the gas stations.
Currently, Brazilian legislation provides for price freedom in the fuel market, the changes in the final pump price depend on transfers made by other components of the fuel sector chain. Before reaching the final consumer, federal and state taxes, acquisition costs, in addition to the mandatory mixing of anhydrous ethanol are added.
Lula Says He Will Reverse Bolsonaro Government Privatizations to Try to Lower Fuel Prices
The year 2022 is a presidential election year. A dispute that already shows itself to be quite intense, with two opposing sides in public administration ideologies. On the neoliberal side, which includes President Jair Bolsonaro under the coordination of Minister of Economy Paulo Guedes, who aims to privatize dozens of state-owned enterprises. On the other side is the pre-candidate and former President Lula, who dismisses the privatization of various public companies. Understand if it will be possible to reverse privatizations here if Lula is elected in 2022.
By Junior Aguiar – Guest Journalist for CPG (Article contains copyright)
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