MOSCOW (MRC) -- Abu Dhabi’s investment fund Mubadala Investment Co will enter into exclusive talks with Petrobras to purchase Brazil’s second-largest refinery, reported Reuters with reference to the Brazilian state-owned oil company's statement in a securities filing.
Reuters was the first to report earlier on Thursday that Mubadala was on an inside track to acquire the refinery, known as Rlam, after beating back competition from India’s Essar Group, according to three people close to the negotiations.
Petroleo Brasileiro SA, as Petrobras is formally known, confirmed in a filing that Mubadala had submitted the best offer and was invited to negotiate.
Mubadala will discuss the contract terms with Brazil’s Petrobras in an exclusive negotiation expected to take several weeks, the people said on Thursday, declining to be named as the talks were not public at the time.
If the contract changes significantly, Petrobras will call back competitors for a second round of bids based on price, the sources said.
Indian conglomerate Essar also made a binding offer for Rlam, as Reuters reported in June, and could compete again for the refinery if Petrobras decides to retender it.
Mubadala and Essar did not immediately respond to requests for comment. Petrobras did not provide any other details outside its securities filing.
A final winner will only be disclosed by Petrobras after all stages are concluded.
Rlam, which is based in the northern state of Bahia and has a 330,000 barrels a day capacity, is the first of a group of eight refineries Petrobras plans to sell to end its near monopoly in fuel processing in Brazil.
As MRC reported previously, Petrobras may need more than a year to divest its stake in Braskem, said Andrea Almeida, Petrobras CFO, in early July. She said during the company’s recent webinar that Petrobras plans to give more time for potential investors to make offers for the company's assets, including for its refineries and stakes at its petrochemical and fuel distribution affiliates. The divestment of Petrobras's stake in Braskem in 2020 would be desirable but "might not be possible" as the COVID-19 pandemic has changed market conditions, she said. The company plans to close part of its refinery sales in 2021. In December, Roberto Castello Branco, CEO of Petrobras, said that he wants to sell the company’s stake in Braskem within a year. Petrobras owns 32.15% of Braskem.
We remind that Braskem is no longer pursuing a petrochemical project, which would have included an ethane cracker, in West Virginia. And the company is seeking to sell the land that would have housed the cracker. The project, announced in 2013, had been on Braskem's back burner for several years.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 595,170 tonnes in the first five month of 2020, up by 10% year on year. Deliveries of all ethylene polymers, except for linear low density polyethylene (LLDPE), rose partially because of an increase in capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market was 457,930 tonnes in January-May 2020 (calculated by the formula production minus export plus import). Deliveris of exclusively PP random copolymer increased.
Headquartered in Rio de Janeiro, Petrobras is an integrated energy firm. Petrobras' activities include exploration, exploitation and production of oil from reservoir wells, shale and other rocks as well as refining, processing, trade and transport of oil and oil products, natural gas and other fluid hydrocarbons, in addition to other energy-related activities.