Sale of eight Petrobras refineries approved by watchdog

Members of the Administrative Board for Economic Defense (Cade) at a floor session today (Jun 11) voted four to two to approve Petrobras’s proposal to sell eight of Brazil’s state-controlled oil giant’s 13 refinement units. The agreement brings an end to a probe by the watchdog on the alleged abuse of power by oil giant.

The deal was brought forward by the company early this month after Cade opened an inquiry on whether Petrobras was misusing its dominant position in oil refinement. The investigation was aimed at ascertaining whether the company was availing itself of its position to set fuel prices and prevent new competitors from coming along. Now, Petrobras has until 2021 to sell the refineries.

Cade head Alexandre Barreto said the debate on the refinement market started after the fuel crisis broke out last year during the strike staged by truck drivers. The discussion was on how the price of fuel was set in the country.

“The assessment indicated that the nearly monopolistic structure in the sector could lead to anti-competitive practices on the part of Petrobras. At no moment, however, was it said that these practices were carried out,” he reported.

The plan includes the sale of refineries Abreu e Lima, Landulpho Alves, Gabriel Passos, Presidente Getúlio Vargas, Alberto Pasqualini, Isaac Sabbá, Lubrificantes e Derivados de Petróleo do Nordeste, and Unidade de Industrialização do Xisto.

The deal also covers divestment in assets linked to fuel transport at subsidiary BR Distribuidora.

The move also stipulates that the same buyer cannot purchase more than one refinery, in a bid to prevent the formation of a new dominant agent in the industry.

Brazil’s Mines and Energy Minister Bento Albuquerque said the decision is in line with the government’s stance to promote divestment at Petrobras and to open the fuel market. The agreement, he argued, is expected to bring a new lease of life to the refinement market by promoting competitiveness and enabling the entry of new agents in the sector.

“We hope this measure contributes to the evolution of the market so as to serve consumers with adequate pricing and quality,” Albuquerque said.