One Of The Largest Petrochemical Companies In Brazil, Unigel Invests In Green Hydrogen And Agribusiness

According to the Petrochemical Industry, Agribusiness and Green Hydrogen Are the Company’s Diversification Bets

Petroquímica Unigel is betting on investments in agribusiness and green hydrogen in order to diversify the company. According to the director of Investor Relations at the petrochemical company, Luiz Felipe Fustaino, the intention is to invest in more competitive products, such as green hydrogen, aiming for new investments and greater employability in Brazil.

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Fustaino further explains: “We continue to invest in Brazil, but we are diversifying the business. First in agribusiness, which is an unbeatable powerhouse and helps us mitigate the risks the sector faces. But we also have a green hydrogen project that places us at the forefront for the fuel of the future, a zero-carbon solution that will be able to be used by the steel and cement industries, for example, which have been challenged to decarbonize their chains”.

At the end of last year, Unigel sealed contracts for the acquisition of natural gas with Petrobras and Shell to supply its nitrogen fertilizer industries in Sergipe and Bahia, which were reopened throughout 2021. Since the beginning of January this year, the agreements are already in effect and together total 2.6 million m³/day of natural gas. The petrochemical company wants to ensure the operation of its factories at full capacity. In Bahia, it established investments with the government for the implementation of a green hydrogen and ammonia industry.

Absence of Benefits

Among the dangers of the petrochemical operation in Brazil, the director addresses concerns about competition regarding green hydrogen and the government’s decision to immediately suspend the Special Regime for the Chemical Industry (Reiq), present in Provisional Measure (MP) 1095/2021. To offset the withdrawal generated by the exemption of aircraft leasing, President Jair Bolsonaro decided to terminate tax benefits granted to the chemical sector.

“We started the year with this bad news, the suspension of the Reiq prematurely. The reduction was already planned, but it would be gradual, until 2025. It is an MP that has not yet come into effect, with some points being questioned. But undoubtedly, the premature end of the regime is a defeat for the industry”, analyzes Fustaino.

The Reiq, enacted in 2013, exempts 3.65% of PIS/Cofins on investments in basic raw materials of the first and second generation. According to the Brazilian Chemical Industry Association (Abiquim), a study conducted by the Getúlio Vargas Foundation (FGV) claims that the unexpected end of the special regime jeopardizes more than 80,000 jobs, brings a revenue loss of R$ 3.2 billion, and a drop in GDP of about R$5.5 billion. In addition, it affects around 20 petrochemical industries, both national and foreign, compromising many investments, including in green hydrogen.

“The chemical industry needs to be seen in the country as a facilitator of the competitiveness of all other sectors. As one of the largest industries in the chemical sector, this concerns us”, adds the director.

Favorable Perspectives

However, the forecast of higher petrochemical spreads has left Unigel optimistic. Widely used in the petrochemical industry, the indicator defines the balance between the product price and the investments in its raw material.

Luiz Felipe says: “[…] In the coming years, we will see higher petrochemical spreads, I believe, because we do not have a growth in supply worldwide, while demand continues to rise with the GDP. Demand grows with the GDP, but supply does not grow at the same pace”.

Considering revenue and EBITDA on the rise, the company is expected to have achieved one of its best results in 2021. Although the data has not yet been released, EBITDA in the last year until September, at R$1.4 billion, was 2.5 times greater than the same period in 2020. Revenue reached R$ 6.3 billion, 94% higher than in 2020.

“We are headed for an excellent result in 2021. The year should close even better than the indicators of the 12 months until September”, adds the petrochemical company’s investor relations director.