Petrobras in refinery talks with GS Energy

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Wednesday, June 12, 2013

Brazil's state-run oil company Petrobras (NYSE: PBR) has signed a letter of intent with South Korea's GS Energy Corporation for a possible joint venture in the US$5.5bn Premium II refinery project.

The announcement on the company's website comes almost a year after Petrobras revealed it was seeking potential partners for the facility in the northeastern state of Ceará.

"The objective is to jointly develop studies regarding the viability of an eventual joint venture between the companies," Petrobras said in the statement.

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"It does not obligate the parties to sign future commercial or operational agreements."

Premium II was originally earmarked to be ready in 2017 but was last year pushed back to mid-2018.

Besides the need for "a technical solution," the project has also been stalled by a dispute with Brazil's national indigenous foundation (Funai).

Local tribes claim the facility will be built on land of historical significance and have requested a compromise deal with Petrobras.

But the federal energy major says it has the documentation needed to begin building at the site.

Located in the municipality of Caucaia, 50km from Fortaleza, Premium II will have a production capacity of 300,000b/d.