The change in command at Petrobras, determined by President Jair Bolsonaro after dissatisfaction with readjustments in fuel prices, may momentarily affect the state’s plan to sell its refineries. The change in the presidency of the company should be made official in April, when the meeting was scheduled to remove Roberto Castello Branco and elect general Joaquim Silva and Luna, in addition to the new councilors appointed by the Union and minority shareholders.
According to experts in the oil and gas field consulted by People’s Gazette, there is a risk that investors will insure the offers for fear of new government interference. There is also the possibility of reducing the price offered by the assets, which may force the company itself to insure or even reevaluate its divestment plan.
In 2019, Petrobras put eight of its 13 refineries up for sale. The goal is to sell them by the end of this year. They represent approximately 50% of the national refining capacity. The goal of the state-owned company is to keep only the refineries installed in the Southeast region and dispose of the others in order to concentrate its operations in the pre-salt. It also seeks to make cash to reduce indebtedness.
But, so far, the only refinery sold has been Landulpho Alves (Rlam), which is located in Bahia. It was purchased by the UAE’s Mubadala investment fund for $ 1.65 billion. The deal was completed in February. The signing of the contract is still subject to the approval of Organs competent bodies. The refinery sale process has already been authorized by the Federal Supreme Court (STF).
The Presidente Getúlio Vargas Refinery (Repar), in Paraná, received proposals, but Petrobras did not accept it, as the values offered were below the desired level. A new competitive process was opened for this unit. Proceedings for the other six refineries for sale (Rnest, Regap, Refap, Reman, Lubnor and Six) are still in progress.
“The scenario was already complicated to sell the eight refineries. The price of a barrel has been recovering, but we are still in a period of uncertainty in the international market, with many companies cutting investments and looking for businesses that generate more rate of return in the short term. And there are few oil companies that operate in Brazil, and they do not operate in an integrated manner ”, evaluates Rodrigo Leão, technical coordinator of the Institute for Strategic Studies of Petroleum, Natural Gas and Biofuels (Ineep).
He says that, according to studies by Ineep, the Bahia refinery (Rlam) was sold for about 50% less than it was worth, due to the factors mentioned above. The investment bank BTG talks about a 35% lower price. “With the change of command [na Petrobras], an additional negative factor is generated, and this will be priced by buyers, who will continue to offer relatively low offers ”, says Leão.
Petrobras affirms that the sale value of Rlam was fair from a financial point of view, as it met the value range estimated by the company and passed through the scrutiny of independent advisers. “The sale, therefore, is only approved internally if it meets the premises stipulated in the process, including the value range estimated by Petrobras and the evaluation of the independent financial advisor. In cases where these conditions are not met by the offers, the divestment process does not proceed to the next steps, as happened with the sale process of the Presidente Getúlio Vargas Refinery (Repar), in Paraná “, says the state company in a note sent to People’s Gazette.
Change in pricing policy could halt the sale once and for all
Professor Edmar Almeida, from the Energy Institute of the PUC-Rio Technical Scientific Center, assesses that Bolsonaro’s interference with Petrobras affects the company’s credibility and increases the perception of risk by investors, who are attentive to possible changes in pricing policy of the state-owned company, which would directly affect the sale of refineries.
“The government made the change of president in a very troubled way and has been expressing its discontent with the fact that Petrobras uses international parity as a price policy. When the government says that it does not agree with the international pricing policy, this means a very big risk for those who are going to buy refineries, as we have had previous cases of buyers who lost their investments because Petrobras sold cheaper on the domestic market ”, comments the teacher.
He cites what happened to the few private refineries that tried to enter Brazil, such as the Repsol YPF group, after the market opened in 1997. At the time, the government was obliging Petrobras not to pass on readjustments in fuel prices. However, the international groups that operated in Brazil bought the product abroad, at an international market price and quoted in dollars. As a result, they were unable to compete with the state-owned company and “broke”.
Adilson de Oliveira, professor and member of the Curator Council of the Federal University of Rio de Janeiro (UFRJ), also believes that the purchase decision should be postponed until it is clarified what the government will do to smooth the increase in fuel prices. “Potential buyers want to know what mechanism the government will adopt for fuel prices, even to see how much that mechanism will make refineries more or less competitive.”
To try to soften the price increase, the government announced the reduction to zero, for two months (March and April), of the federal taxes on diesel. It also sent a bill to Congress that seeks to provide predictability for the collection of ICMS on fuels, but the text is not expected to be processed and faces opposition from governors. Other tax mechanisms and the creation of a price stabilization fund are among the measures still under study.
Despite concerns about the measures that may be taken, Edmar Almeida does not believe that the government will be able to interfere in Petrobras again, due to the rigid governance rules incorporated by the company in recent years and the fact that the new directors appointed by the Union are market professionals. As a result, investors’ perception of risk would move away and the sale of refineries could be unlocked.
Interruption of the sale process cannot be ruled out, experts say
Adilson de Oliveira, from UFRJ, does not rule out pressure from the government for Petrobras to handle the refinery sale processes. “The sale of refineries should be left to the next government. This government will not want to create more controversy and is clearly divided ”, he says.
“On the one hand, the Ministry of Economy defends privatization and price liberalization. On the other, this new potential management with Silva and Luna [general indicado para presidência da Petrobras], which apparently wants Petrobras to be a company that looks at the social, and not just at shareholders, ”explains the professor at UFRJ.
For Rodrigo Leão, technical coordinator of Ineep, the interruption of sales processes is not a negative thing. He says that Petrobras has the role of guaranteeing the supply of fuels in the country, coordinating all distribution logistics, since even the sale of Rlam owned 98% of the refining chain. According to him, changes in the control of the refineries could harm this process, as there is no agency that takes care of this distribution policy.
“We may have supply problems in the domestic market. Of course, the market can organize itself and avoid shortages, but it is a risk in the way the sales process is being carried out ”, he points out, highlighting that the risk is greater in the North and Northeast regions, where there is no competition from refineries .
Professor Adilson de Oliveira also believes that the sale of refineries can cause problems for the domestic market and for Petrobras itself. “The problem is that the necessary expansion of the refining chain has not taken place [no Brasil], so let’s live on this drama of being big oil exporters and big oil products importers [mesmo com a venda das refinarias]”, Explain.
PUC-RJ professor Edmar Almeida argues that the refineries’ sales process should not be interrupted, even to avoid pressure to control fuel prices. “The popular view is that the president [da República] it can send Petrobras to lower fuel prices, because it owns the refineries. That is why the sale of refineries is the only way to overcome this threat to intervene in prices when the exchange rate and the price of a barrel rise. “
For Almeida, competition in the sector will be beneficial and the trend is to reduce price volatility. “In countries that have competition in the import, refining and sale of oil products, companies are fiercely competing in the market and are looking for different strategies to avoid having to increase overnight. [o preço]. One option is to make a price hedge, a strategy that Petrobras does not adopt. ”
In a note, the Brazilian Institute of Oil and Gas (IBP) defends the process of opening the market and states that the interaction of supply and demand, with prices floating freely and reflecting the international market for commodities, will guarantee the security of supply.
“In this context, the IBP reinforces the importance of freedom of prices and negotiation between economic agents as the only safe way to bring balance to the market and attract new private investors to boost the production and handling infrastructure for oil products and biofuels, of fundamental importance. for the country’s economic development and security of supply “, says the institute.
Petrobras has not commented on the possibility of a delay in the company’s divestment plan.
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