Petrobras deal paves way for Premium II refinery construction

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Friday, November 22, 2013

Brazil's state-run oil company Petrobras (NYSE: PBR) has signed a deal with local indigenous groups that paves the way for the construction of its Premium II oil refinery.

In a statement released Friday (Nov 22) afternoon, Petrobras said it had pledged 15mn reais (US$12mn) towards indemnity payments and the creation of an indigenous reserve.

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The deal ends a protracted impasse that threatened the future of the US$5.5bn facility in the northeastern state of Ceará.

"The agreement is part of the licensing process for the construction of the refinery," Petrobras said in the statement.

Premium II was originally slated for completion in 2017 but was last year pushed back to mid-2018 due to the dispute with national indigenous foundation Funai.

It suffered a further setback last month when South Korea's GS Caltex scrapped plans for a joint venture in the project.

Located in the municipality of Caucaia, 50km from state capital Fortaleza, Premium II is earmarked to boast a production capacity of 300,000b/d.

Petrobras says four new refinery projects, which also include the Premium I, Abreu e Lima and Comperj facilities, are vital to reducing its dependence on fuel imports.