Petroleo Brasileiro SA (PETR4), the world’s most indebted publicly traded oil company, is in talks with China Petroleum & Chemical Corp. (600028) to build a refinery in Brazil to meet growing domestic demand, Brazil’s energy minister said.
The state-controlled crude producers are also discussing partnerships for oil block auctions this year in Brazil, Edison Lobao told reporters in Brasilia today. Brazil’s government advised Petrobras Chief Executive Officer Maria das Gracas Foster to seek partnerships in China, where she is now, he said.
Since 2009, Petrobras’s refining capacity shortages prompted the Rio de Janeiro-based company to increase imports of gasoline, which it sells at a loss. Petrobras has earmarked $24.9 billion of its $236.5 billion, 2012-2016 business plan to expand refinery capacity, including completing two new refineries in the period. Three other planned refineries won’t be finished until at least 2017, according to the business plan.
“Petrobras Chief Executive Graca Foster is in China to negotiate with Sinopec to finance refineries and also to form a partnership to explore pre-salt oil and take part in oil auctions,” Lobao said.
An auction of non-conventional gas blocks originally slated for December will be held in October, he said. Brazil has said it will hold two additional oil auctions in 2013, one in May and one in November. The second one will be for so-called pre-salt blocks, in which Petrobras is required to be the operator in all ventures.
Sinopec, as the Chinese oil producer is known, operates in Brazil through joint ventures with Portugal’s Galp Energia SGPS SA (GALP) and Spain’s Repsol SA and also has petrochemicals operations in the country.
Petrobras shares fell 1.6 percent to 14.49 reais in Sao Paulo trading today.
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