Sinopec, Eig Deliver Bid for Petrobras Refinery in Minas State

Source Press
Company Sinopec Corp., EIG Global Energy Partners, Petrobras (IFRS US$ Current)
Tags Corporate: Overview/Strategy, Country: Brazil, Downstream: Downstream News, M&A: Deal Rumours
Date December 17, 2019

China’s Sinopec and U.S.-based EIG Global Energy Partners have delivered non-binding offers to buy Brazilian refinery REGAP from state-run oil firm Petrobras, three people with knowledge of the matter said.

With a processing capacity of 150,000 barrels per day, REGAP is the fifth-largest refinery of eight up for sale by Petrobras, as part of a plan to raise around $10 billion to pay debts and sharpen its focus on offshore oil exploration and production.

REGAP in the state of Minas Gerais is the only refinery for sale in southeastern Brazil, the nation’s economic powerhouse and the heart of its oil industry.

The bid marks an entry into the race by Washington-based EIG, as the private equity firm looks to boost its downstream presence in Brazil’s energy industry. Reuters had reported last month that EIG was interested in REGAP.

Sinopec had already delivered a non-binding offer for RLAM, a refinery in the northeastern state of Bahia, which is part of the first block of refineries put up for sale by Petrobras.

Other firms selected for the second round of bidding on that block of refineries are Abu Dhabi’s state investor, plus fuel distributors Ultrapar Participações SA and Raizen.

REGAP could offer operational efficiencies for EIG, which owns the Port of Açu in Rio de Janeiro state. Oil received at the port could be transported 500 kms (310 miles) inland to REGAP. EIG also owns a major stake in a Bolivia-Brazil gas pipeline and has bid on other assets divested by Petrobras.

EIG declined to comment. Sinopec did not immediately respond to a Reuters request for comment. Petroleo Brasileiro SA, as Petrobras is formally known, said it would announce any noteworthy developments via public filings.

The buyer of REGAP will also receive pipeline infrastructure connecting it to the region of the REDUC refinery, near Rio de Janeiro city, one of the sources said. Connections from there to nearby seaports, such as Açu, are under study, the source added.

Brazil’s Raizen and Ultrapar Participacoes SA were also eyeing REGAP, but it is not clear if they delivered bids.

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