Business environment worsens once more for sale of Petrobras refineries

Finding buyers for refineries put up for sale by Brazil’s government-controlled oil major Petrobras was already deemed a difficult task for 2022. Now, however, increased political pressure to change Petrobras’s pricing policy has once again increased investors’ perception of risk regarding the company’s assets. 

According to sources, the government held discussions last week regarding the creation of a fuel subsidy program and even a temporary freeze on Petrobras prices, currently pegged to international rates. While neither of these alternatives moved forward, President Jair Bolsonaro himself noted on Saturday that he has not discarded the idea of subsidies, “if they are necessary, so Brazil’s economy doesn’t stop.”

The increase in gasoline and diesel prices last Friday — after 57 days without rate changes by Petrobras — may give an indication to the market about the company’s independence. That said, the price hike was preceded by several meetings with the government, igniting concern among investors of possible interference in the company.

Added to this is fear that the process of opening up refining in the country will go unfinished if frontrunner Luiz Inácio Lula da Silva wins the presidential election in October. Lula has openly stated that he intends to end the oil company’s current pricing policy, which is necessary for private importers and refiners to continue operating in the country.

Back in 2019, Petrobras pledged to sell eight refineries by 2021. So far, only one has been sold for a total of USD 1.8 billion. The oil and gas company also signed two other contracts with the Atem and F&M groups, but sales have not yet been concluded.

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