Petrobras, Mubadala Strike Deal on Refinery, Biofuel Projects

Petrobras and Mubadala have agreed to a deal that involves Petrobras taking back control of a refinery and partnering with the fund on biofuel projects

by Victor Adetimilehin

Brazil’s state-run oil company Petrobras has reached an agreement with Abu Dhabi’s sovereign investor Mubadala to take back control of a refinery in Bahia, while also partnering with the fund on biofuel projects. The deal, announced on Tuesday, is part of Petrobras’ strategy to boost its fuel production and reduce its debt.

Refinery buyback

Petrobras sold the Landulpho Alves Mataripe Refinery (RLAM) to Mubadala in 2021 for $1.65 billion, as part of a divestment plan enacted by the previous administration. However, the company suggested it could buy back some refining assets after leftist Luiz Inacio Lula da Silva took office in 2023.

According to Petrobras CEO Jean Paul Prates, the deal would bring RLAM back into Petrobras’ network, increasing its competitiveness and synergies with other refineries. He said on X, formerly Twitter, that both firms would intensify efforts on the corporate and operational details of the deal over the next few months.

RLAM accounts for about 10% of Brazil’s oil refining capacity and produces gasoline, diesel, jet fuel, asphalt and other products. Petrobras has previously said it would “evaluate the acquisition of a stake” in RLAM and Mubadala-owned Acelen Renewable Energy.

Biofuel partnership

The deal also involves Petrobras joining Mubadala in its downstream operations in Bahia, including a biorefinery that would require $2.5 billion of investment. The biorefinery, which is expected to start operations in 2025, would produce biodiesel, biojet fuel and green hydrogen from soybean oil and animal fats.

Prates said the partnership would help Petrobras achieve its goal of becoming a net-zero emissions company by 2050, as well as diversify its energy portfolio and create jobs in the region. He said Petrobras and Mubadala shared a vision of a low-carbon future and a commitment to sustainable development.

Mubadala is one of the largest sovereign wealth funds in the world, with assets worth over $230 billion. It has invested in several sectors in Brazil, including aerospace, health care, real estate and technology. The fund’s CEO, Khaldoon Al Mubarak, said he was pleased to deepen the relationship with Petrobras and support Brazil’s energy transition.

Source: Reuters

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