By Tatiana Bautzer, Rodrigo Viga Gaier and Carolina Mandl

SAO PAULO/ RIO DE JANEIRO (Reuters) – Brazil’s state-controlled oil firm Petrobras has raised costs at the very least as soon as in the midst of the divestiture technique of its largest refineries, irritating some bidders and delaying the lengthy awaited promise of breaking Petrobras’ monopoly in refining, 4 sources with data of the matter instructed Reuters.

Bidders have been stunned by what they describe as last-minute adjustments within the divestiture course of demanded by Petroleo Brasileiro SA, as the corporate is formally recognized, the sources added, asking for anonymity to reveal non-public discussions with Brazil’s largest state-run firm.

Petrobras, which used to regulate nearly 100% of refining in Brazil, has dedicated to cut back its capability by 50% promoting eight of its 13 refineries after a deal in June 2019 with antitrust watchdog CADE to introduce competitors in gasoline pricing. However to date it offered solely three and a discount in political pressures to artificially set gasoline costs appears distant.

The sources mentioned pricing adjustments, along with a paucity of purchaser curiosity partially fueled by strain from buyers nervous about ESG targets towards shopping for fossil gasoline property, have plagued the sale of at the very least two of Petrobras’ largest refineries on sale, REFAP and REPAR.

Petrobras has but to restart the sale technique of REFAP and REPAR, which have capacities of 201,280 barrels per day and 207,563 bpd respectively, producing 17.8% of Brazil’s gasoline output, in line with oil regulator ANP information.

In July, Cade prolonged a deadline for Petrobras to promote the eight refineries it had dedicated to divest to Dec. 31, however Petrobras has publicly admitted the deadline is not going to be met.

On Nov. 30, Chief Monetary Officer Rodrigo Araujo mentioned Petrobras was unlikely to promote REPAR and REFAR earlier than the October 2022 presidential elections.

In a press release to Reuters, Petrobras mentioned it’s “totally dedicated” to the sale of all eight of the refineries included within the settlement with Cade.

Petrobras will attempt once more to promote three refineries that had their processes canceled, REFAP,REPAR and RNEST.

The corporate is continuing with the divestitures of LUBNOR, a 8,000-bpd refinery within the northeastern area that produces solely asphalt and lubricants, and 150,00-bpd REGAP, situated within the state of Minas Gerais, representing 7.1% of complete refining capability.

TALKS BREAKDOWN

Brazilian conglomerate Ultrapar Participacoes had been in talks with Petrobras since January to amass the REFAP refinery, which accounts for 7.7% of complete Brazilian refining capability and is situated within the southern state of Rio Grande do Sul.

However for the reason that starting of the talks, Petrobras had been attempting to get a better worth, and in September, it determined to ask for a better bid, two sources with data of the matter mentioned. Ultrapar representatives, who thought they’d already secured a worth and have been discussing contract particulars, rejected the request and left the talks.

Petrobras introduced the talks failure on Oct.1.

Ultrapar declined to touch upon the matter. Petrobras declined to touch upon particularly asking for a better worth for REFAP.

One thing totally different occurred with REPAR, a refinery situated within the southern state of Parana that concentrates 10.1% of Brazil’s refining capability, in line with ANP information.

Raizen, a three way partnership of Royal Dutch Shell (LON:) and Brazilian vitality firm Cosan (NYSE:), had expressed curiosity within the asset. Raizen delivered a bid above the initially set minimal worth, however Petrobras then raised the value and rejected the bid as too low.

Raizen declined to boost its provide, no different bidders emerged and in February, Petrobras mentioned in a press release it could not promote REPAR because it thought of bids too low. Raizen declined to remark.

“There was no rule change in the course of the sale course of,” Petrobras mentioned in a response to Reuters questions concerning the mater.

However a fifth supply aware of the divestiture mentioned “totally different variables outline the value and they’re often up to date”. Since Petrobras launched the refineries sale course of greater than two years in the past, international benchmark has soared about $10 to $73 on Tuesday.

Negotiations for REGAP additionally look like stalled. Petrobras requested for non-binding affords that have been delivered in November 2019.

Not less than one bidder, non-public fairness agency EIG International Power Companions, delivered a bid, however negotiations didn’t progress, in line with a sixth particular person with data of the matter. EIG declined to touch upon the matter.

SLOW DIVESTITURE

Thus far, Petrobras has offered three refineries. The biggest one is RLAM refinery, within the northeastern state of Bahia with 330,000 bpd capability, which represents 14% of Brazilian refining capability, to United Arab Emirates investor Mubadala Funding Co for $1.8 billion.

Different very small refineries within the northern area have been additionally offered: 46,000 bpd REMAN to Brazilian regional group Atem and 6,000-bpd SIX to Forbes & Manhattan Assets.

However the property offered to date are inadequate to affect costs within the home gasoline market.

Because the asset gross sales drag on, demand for refineries is dwindling. A number of of them fetched a single provide and there was no-one desirous about RNEST, within the northeastern state of Pernambuco.

After the failure of the sale, Petrobras introduced that can put money into the 115,000-bpd RNEST refinery and lift its capability to 260,000 bpd in 2027.