Brazilian state-run oil company Petrobras has terminated the contract for the sale of its Lubrificantes e Derivados de Petróleo do Nordeste (LUBNOR) refinery in north-eastern Brazil. The decision came as Grepar Participações (Grepar), the prospective buyer, failed to meet compliance standards for the deal.
Initially agreed upon in May 2022, Petrobras had struck a deal to sell the LUBNOR refinery and its associated logistics assets to Grepar for US$34 million (166.6 million reais). However, Petrobras announced the termination of the contract, citing Grepar’s inability to comply with conditions by the final deadline of November 25, 2023.
In a press statement, Petrobras said, “Due to the lack of compliance with Conditions Precedent established therein until the Final Deadline defined in such contract (11/25/2023), despite the best efforts undertaken by Petrobras to conclude the transaction, the contract has been terminated.”
Consequently, Petrobras will retain operations at the LUBNOR refinery, situated in Fortaleza, Ceará, with a processing permit for 8,200 barrels of oil per day (bopd).
Grepar, dissatisfied with Petrobras’ decision, has announced plans to pursue legal action seeking compensation for losses and damages incurred. The company stated, “Grepar will adopt, in the appropriate jurisdiction, legal measures to protect its right to be compensated for losses and damages that Petrobras has deliberately caused it, frustrating the deal already contracted.”
Simultaneously, Petrobras has taken steps by filing requests to Brazil’s competition regulator, Cade, to renegotiate terms requiring the sale of its oil refining and natural gas assets. These terms were part of a wider initiative by the former government, led by President Jair Bolsonaro, aimed at reducing Petrobras’ market share in Brazil’s oil and gas sector, fostering competition, and inviting new investments.
Arguing for a renegotiation, Petrobras cited its recently unveiled strategic plan, emphasizing extensive investments in these assets. The company conveyed to Cade its intent to “act competitively and safely, maximize value capture by adapting and improving our industrial park and supply and logistics chain,” and to achieve self-sufficiency in the oil derivatives segment.