Ipiranga, Petrobras sign 60,000 cu.m/month supply deal

Brazil's federal energy company Petrobras (NYSE: PBR) and the Ipiranga refinery have signed a contract for the supply of 60,000 cubic meters of crude a month for one year, local press reported. Ipiranga and Spanish-owned Repsol YPF's Manguinhos are the only two private refineries in Brazil, together accounting for about 2% of the country's refining capacity. Petrobras controls the rest, and Ipiranga and Manguinhos have found it difficult to avoid losses because of the government's reluctance - through Petrobras - to raise domestic fuel prices despite this year's steep increase in crude prices. The value of the contract was not disclosed, but Petrobras supplies manager Paulo Roberto Costa was reported as saying that it was based on international oil prices in the week beginning November 29. Ipiranga will reportedly make an initial payment, and then at the end of the contract term will pay any necessary adjustments - with interest - resulting from fluctuations in international oil prices during the term of the contract. Refinery director Elizabeth Telechea was reported as saying that the deal with Petrobras gives Ipiranga greater operating security.