Manguinhos could stop operations in 3 months

Manguinhos Refinaria, one of the two privately owned refineries in Brazil, may stop operations in three months if domestic fuel prices continue to lag behind international oil prices, according to local press reports. The reports quoted João de Lucca, the Brazil manager of Spanish oil group Repsol YPF (NYSE: REP), which shares control of Manguinhos with Brazilian group Peixoto de Castro. The Rio de Janeiro-based Manguinhos refinery has been operating at reduced capacity as domestic fuel prices are equivalent to US$51 a barrel, below the international price of US$57/b, the reports said. Lucca urged the Brazilian government to find a lasting solution for the lag between domestic and international prices. Like the other private refinery in Brazil, Manguinhos is mostly dependent on federal energy company Petrobras (NYSE: PBR) for supplies of crude. While Petrobras revises crude and naphtha prices regularly, it readjusts fuel prices much more slowly, affecting the sale prices of competitors since it has a virtual monopoly on the domestic fuels market.