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South Korea's GS Caltex has scrapped plans for a joint venture in Brazil's Premium II refinery project, casting fresh doubt over the ability of state-run oil firm Petrobras (NYSE: PBR) to meet its downstream goals.
GS Caltex chairman Hur Dong-Soo told media on Monday the decision reflected the company's focus on adding value from oil derivatives for its domestic market.
"We decided not to go for the (Brazilian) project. We dropped it completely and so has GS Energy as we are not sure whether it is a profitable project," Hur was quoted telling media.
"It usually costs about US$900mn to build a 40,000b/d facility. If we want to do 150,000b/d, you can imagine how much it costs."
GS Caltex is jointly controlled by Chevron Corp (NYSE: CVX) and South Korea's GS Energy.
Petrobras was not immediately available for comment on Monday.
The decision comes less than a month after Venezuela's state oil company PDVSA reportedly abandoned its multibillion-dollar commitment to the Abreu e Lima oil refinery in Brazil's northeastern city of Recife.
In June Petrobras signed a letter of intent with GS Energy Corporation to invest in the US$5.5bn Premium II plant.
Located in the municipality of Caucaia, 50km from Fortaleza, Premium II will have a production capacity of 300,000b/d when finished in 2018.