Rio de Janeiro, 15 October (Argus) — Brazil’s state-controlled Petrobras only expects to sign one refinery sales agreement by year-end, rather than five as originally targeted, a senior company executive familiar with the process tells Argus.

The delay stems from scheduling problems associated with the Covid-19 pandemic, oil market volatility, and a court challenge  recently decided in Petrobras’ favor.

The refinery divestment program was launched in April 2019 as part of an agreement with anti-trust agency Cade.

The sole sales agreement likely to be signed by the end of December is for the 333,000 b/d Landulpho Alves refinery (Rlam) in Mataripe, the executive said.

Petrobras has been in exclusive talks with Abu Dhabi’s state-owned investment fund Mubadala for the refinery since July.

In September, Petrobras said two similar bids for the 208,000 b/d Presidente Getulio Vargas refinery (Repar) would require a second round of binding offers, possibly this month. China’s state-owned Sinopec and domestic fuel distributors Raizen and Ultrapar participated in the first round.

Petrobras is targeting the launch of binding offers in the fourth quarter for three more refineries: 208,000 b/d Alberto Pasqualini (Refap) in Canoas; 115,000 b/d Abreu e Lima (Renest) in Ipojuca; and 166,000 b/d Gabriel Passos (Regap) in Betim.

Offers for three smaller refining units are on tap for first half 2021. Petrobras is selling another refinery, 39,600 b/d Potiguar Clara Camarão Refinery (RPCC) in Rio Grande do Norte state, as part of an upstream cluster outside the scope of the original Cade agreement.

The delays are increasing the probability that Cade will grant an extension of the 2021 deadline for refinery sales to close. Petrobras and the agency have discussed the possibility of an extension in recent weeks, company executives have said.

The timeline for sales has been complicated by health safety protocols and the supreme court challenge initiated in July. Earlier this month the court rejected a senate request to subject the sales to congressional oversight.

The company is counting on revenue from the refinery sales to reduce its debt load. The sales are a major facet of its $20bn-$30bn non-core assets divestment target, likely to be expanded under a forthcoming business plan expected to be released in November.

The company plans to publish third quarter results on 28 October.

By Nathan Walters