
Why Petrobras has moved forward with upstream divestments but halted downstream sales

As expected, Brazil's Petrobras has moved forward with upstream divestments and halted key downstream asset sales since the election victory of Luiz Inácio Lula da Silva at the end of October.
The president-elect’s transition team for the energy sector considers it of strategic importance that the state-owned firm remains an integrated up and downstream company with a major presence in the refining, natural gas and petrochemical segments, while investing in alternative energy sources.
Petrobras is likely to invest in integrated parks in the southeast region and resume investments in fertilizer projects in the coming years, Henrique Jager, a researcher at Brazilian petroleum research institute Ineep, told BNamericas.
On Tuesday, Petrobras concluded the sale of the Carmópolis onshore hub to Carmo Energy, a subsidiary of Spain’s Cobra in Brazil, for US$1.10bn.
The asset encompasses 11 fields in Sergipe state, and includes access to processing, storage, and transportation infrastructure for oil and natural gas.
Also part of the Carmópolis hub is the Atalaia complex, which contains the Aracaju water terminal (Tecarmo) and the Bonsucesso-Atalaia pipeline, which transports oil from Carmópolis to Tecarmo.
The average production of Carmópolis in November was 4,500b/d of oil and 22,000m3/d of gas.
On the same day, Petrobras launched the non-binding stage of the sale of Petrobras Operaciones (Posa), a subsidiary in Argentina that holds a 33.6% stake in the Rio Neuquén field.
Río Neuquén's production comes mainly from unconventional reservoirs (tight gas) of the Punta Rosada and Lajas formations.
Posa’s average output in January-November was 1.52Mm3/d (million cubic meters per day) of natural gas and 730b/d of oil.
Meanwhile, Petrobras wrapped up the sales of its Araucária Nitrogenados (Ansa) fertilizer plant, in Paraná, the Gabriel Passos (Regap) refinery, in Minas Gerais, and the Canoas gas and diesel-fired thermal plant, in Rio Grande do Sul.
Two downstream divestments that had their sale contracts signed before the elections were also concluded: the SIX shale industrialization unit, which was picked up by Forbes & Manhattan Resources, and the Isaac Sabbá (Reman) refinery, which was purchased by Atem Distribuidora.
An exception was the beginning of the bidding phase for the sale of Petrobras’ 34.5% stake in the Metanol do Nordeste (Metanor) petrochemical company, in Bahia state, on December 6.
Through its subsidiary Companhia Petroquímica do Nordeste (Copenor), the firm sells methanol and its derivatives, such as formaldehyde and hexamine.
Jager said that Petrobras’ current strategy calls for a concentration of its assets in the country’s southeast region, next to its main oil and gas fields and refineries.
“With the new government, planning will be reviewed and the trend will be for greater portfolio diversification, but I don't know to what extent Metanor is a strategic asset,” he told BNamericas.
Lula will assume power on January 1.
As for Braskem, parent Novonor (formerly Odebrecht) wants to get rid of the business as it holds back the company and its growth plans.
“Either Petrobras buys the Novonor stake or it gets a partner that is willing to invest. So its petrochemical business will move through the resolution of the Braskem case to then reevaluate the resumption of investments in this segment,” Jager said.
The researcher believes that an eventual resumption of petrochemicals investments by Petrobras would focus on integrated parks, close to its refining plants.
“The strategy in Bahia does not seem very feasible to me, unless Petrobras repurchases RLAM [the Mataripe refinery], which I don't believe will happen,” said Jager.
A significant part of Braskem's assets are located in the Camaçari petrochemical complex, in Bahia state.
Regarding the fertilizer area, Jager believes Petrobras will resume investments, possibly putting Ansa back into operation with its reconversion to natural gas.
"Today, the plant is operated from asphaltic rock, whose market value has appreciated. This has made its operation expensive, which led to the demobilization of the plant," he said.
In addition, Petrobras will probably finish the construction of the Três Lagoas nitrogen fertilizer plant (UFN-III) in Mato Grosso do Sul state, "if only to recover the investments already made and sell it later," Jager said.
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