Brazilian state-controlled oil company Petrobras will no longer have to sell four refineries earmarked for divestment by the previous government, following a ruling by the country’s competition watchdog on Thursday.
The decision means Petrobras can retain control of refineries such as Repar in Rio de Janeiro, Refap in Rio Grande do Sul, Regap in Minas Gerais and Rnest in Pernambuco. It managed to avert the sale of a fifth plant, Lubnor, last year. The firm will not have to sell the Bolivia-Brazil gas pipeline either. The agency’s ruling also means the company may be able to buy back some of the refineries that were privatized in recent years.
The administration of Brazilian President Luiz Inácio Lula da Silva says that Petrobras’ investment in refineries support the government so-called “neo-industrialization” program while critics say that it gives Petrobras a monopoly in the refining market. And given that the business is less profitable than oil exploration and production, it does not benefit shareholders, opponents argue. Investment in refineries has also been a source of corruption in the past.
“The change is in line with the orientation of the current government to prevent the sale of company assets. Now we will have to monitor future investment flows,” Pedro Galdi, an investment analyst at Mirae, a Brazilian asset management firm, told LatinFinance. “At present, we depend on imported diesel, and it may help reduce this dependency.”
Petrobras is already in talks with Mubadala to buy back the Mataripe refinery, which the Abu Dhabi sovereign fund acquired in 2021 for $1.6 billion.
The ruling could set the tone for Petrobras under its new CEO, Magda Chambriard, who is expected to be confirmed by the company’s board on Friday.