By Luciana Magalhaes and Marta Nogueira
RIO DE JANEIRO (Reuters) – Brazilian state oil company Petrobras is completing due diligence for a bid for the Mataripe refinery it sold to Abu Dhabi sovereign wealth fund Mubadala for $1.65 billion in 2021, three people told Reuters. were familiar with the case told Reuters.
President Luiz Inacio Lula da Silva campaigned against the sale of Petrobras refineries and has insisted the company will accelerate investments in the job creation segment. However, no agreement has yet been reached on the structure and price of a possible buyback, people involved in the talks said.
These talks could delay the deal, which has been in the works for several months as the refinery, also known as RLAM, was sold below market value by some accounts.
Brazil’s comptroller general found that Petrobras may have sold the refinery at a discount during the COVID-19 pandemic. The union-backed Institute for Strategic Studies in Oil, Natural Gas and Biofuels (Ineep) estimated in 2021 that the refinery was worth between $3 billion and $4 billion.
Petrobras did not immediately respond to a request for comment. Mubadala representatives declined to comment.
Discussion of a possible buyback surfaced last year when Mubadala proposed a joint investment in traditional refining and a new biorefinery sharing infrastructure with the Mataripe refinery in Bahia state, a stronghold of Lula’s Workers’ Party.
“If you ask me whether Brazil should have sold refineries, I would answer firmly no,” Brazil’s Minister of Mines and Energy, Alexandre Silveira, told Reuters this week.
He said in an interview that he is also talking to representatives of the Mataripe refinery, but said Petrobras will only make a deal if the buyback is “economically feasible.”
Petrobras initially planned to buy an 80% stake in Mataripe and make a minority investment in a biofuel plant with Mubadala, according to a person familiar with the talks. The same person said it is unclear whether a deal with that structure will go through after Lula replaced Petrobras’ CEO in May.
Petrobras has also discussed offering Mubadala the same price it paid for the refinery in 2021, plus interest and repayment of the sovereign wealth fund’s investments to modernize the plant, according to two people close to the talks.
Petrobras owns 11 refineries that produce about 80% of domestic fuel output after the sale of two plants under former President Jair Bolsonaro, when the oil company divested downstream assets to focus on deepwater exploration.
Built in the 1950s, RLAM is Brazil’s second-largest refinery, with the highest capacity for producing gasoline, diesel and other oil derivatives in Brazil’s north and northeast, according to operator Acelen, which is controlled by Mubadala.
Silveira said Mubadala wants to sell RLAM because it made the acquisition on the assumption that Petrobras would sell several more refineries. Instead, Mubadala’s share of the refining market is still dwarfed by that of Petrobras, on which it is dependent.
“This buyback will have to continue. It no longer makes sense for a private investor like Mubadala to own a refinery in Brazil,” said Adriano Pires, an oil industry analyst who once emerged as a potential CEO of Petrobras under the last administration came.
