Petrobras signs deals to terminate refining, gas divestments

Petrobras has signed an agreement with Brazil’s antitrust authority Cade on the amendments to its natural gas and refining divestment deals. 

Inked in 2019 during the Jair Bolsonaro administration, the terms of the deals were designed to reduce the state-run firm’s dominant position in those markets. 

In a statement, Petrobras said that the new obligations preserve the original objective of the agreements to maintain competitiveness in the refining market. 

As a result of its obligations to Cade, the company published its guidelines for marketing crude oil to third parties for delivery by sea. 

The guidelines stipulate that the company must preserve and prioritize its economic result, seeking to maximize value generation, always implementing competitive prices, in line with the international market 

According to Petrobras, the authority responsible for approving each deal should also base its decision on market references at the time of negotiation, such as the counterparty's supply alternatives and the opportunity cost for Petrobras. 

The counterparty's alternative cost includes the main supply alternatives, while the opportunity cost for Petrobras is based on the company's alternatives.

Petrobras has undertaken to offer any independent refinery in Brazil the availability of a minimum volume of oil for delivery by sea, during monthly negotiation periods, without any commitment to purchase from Petrobras.

"This is not a strategic point, it's just an operational issue. There's always been transparency in this pricing and care has been taken to keep the market competitive," Marcus D'Elia, a partner at Leggio Consultoria, told BNamericas. 

The new agreement with Cade also establishes that Petrobras will present the agency with information that will allow it to verify the non-discriminatory nature of the sale of crude oil to third parties and Petrobras' commercial strategy for the sale of oil derivatives. 

With the amendment, the sales of the refineries Abreu e Lima (RNEST), Presidente Vargas (Repar), Gabriel Passos (Regap), Alberto Pasqualini (Refap) and Lubrificantes e Derivados do Nordeste (Lubnor) were canceled. 

In the case of gas, the addendum signed resulted in the termination of the obligation to sell Transportadora Brasileira Gasoduto Bolívia-Brasil (TBG), which operates the Bolivia-Brazil gas pipeline (Gasbol). 

Officially technical, Cade’s decision reflects the change in the strategic orientation of Brazil’s energy sector after Luiz Inácio Lula da Silva took over as president in January 2023. 

The termination of the divestments was a demand of local oil workers' unions such as FUP – a key Lula ally that was dissatisfied with Petrobras’ recently fired CEO Jean Paul Prates.