Petrobras provides information on UFN-III Project

By Petrobras

October 25, 2024

This is a machine translation of the press release originally published in Portuguese.

Petrobras reports that its Board of Directors has approved the continuation of the implementation of the Nitrogen Fertilizer Unit (UFN-III), located in Três Lagoas (MS). The decision is based on a careful reassessment of the project which, in light of the premises of the Strategic Plan 2024-2028 (SP 2024-2028), had its economic attractiveness confirmed for this phase in the different scenarios foreseen in Petrobras' investment project approval system, including with a positive NPV in the most challenging scenario.

The Unit had been dormant since 2015 and the project reassessment process began last year, following the approval of the company's return to the fertilizer segment, in line with the strategic guidelines approved within the scope of the SP 2024-2028.

With this decision, the project will be included in the current Strategic Plan's implementation portfolio and Petrobras will begin the contracting process to resume construction work on the Unit. The estimated investment for completion of UFN-III is approximately R$3.5 billion and operations are expected to begin in 2028.

The contracts will undergo all necessary analyses, in compliance with governance practices and applicable internal procedures. The final authorization will still be submitted for approval by the competent authorities at Petrobras, which will allow the signing of the contracts to resume the works.

About the UFN-III Project

The UFN III project foresees the annual production of approximately 1.2 million tons of urea and 70 thousand tons of ammonia. The Unit is located close to the main consumer markets for these products and will mainly serve the states of Mato Grosso, Mato Grosso do Sul, Goiás, Paraná and São Paulo. The strategic location provides greater reliability in relation to the supply alternatives for this market, whose demand for urea fertilizer shows a growing trend.

Furthermore, the project features modern equipment and technologies in fertilizer production, resulting in high plant efficiency.

Ammonia is a raw material for the production of fertilizers and petrochemicals, as well as other agricultural products; and urea is the most widely used nitrogen fertilizer in Brazil, with national demand estimated at around 7 million tons by 2024, currently entirely imported. Corn is the main crop for urea fertilizer demand in Brazil, but the product is also used in the cultivation of sugarcane, coffee, wheat and cotton, among others. Urea will also be used in the livestock segment, used as a feed supplement for ruminant animals.