Brazil Campaigns for Foreign Investments in Oil Refining

By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – With the objective of stimulating free competition and attracting foreign investments in the oil and gas sector, the Brazilian government launched the ‘Fuel Brazil’ initiative on Monday (February 20th).

“It is important that we can open this sector, under a new vision of government, to give competitiveness… It is time to discuss whether we want to be a self-sufficient country or one with a better balance in fuel supply for the future,” said Mines and Energy Minister (MME) Fernando Coelho Filho on Monday at an event to launch the campaign.

Although no specifics were given during the presentation, government officials did state that among the main strategies of the initiative are the redesign of the fuel supply scenario due to Petrobras’s new role, promotion of new investments in the supply sector, especially refining, new rules for access and development of port infrastructures and fuel supply terminals and the stimulation of increased competitiveness in the fuel market.

According to officials one of Brazil’s largest oil refineries, government-owned Abreu e Lima Refinery located in Pernambuco, today operates with half of its capacity and will be opened to partnerships with the private sector.

According to Márcio Félix, Secretary of Petroleum, Natural Gas and Renewable Fuels at the MME the market will have a greater participation in creating the new rules and regulating the sector, making it more appealing to foreign companies wanting to invest in refining operations in Brazil.

Félix said that although a 1997 law did away with Petrobras’ monopoly in the refining segment, today more than 95 percent of the sector is still controlled by the state. For the official it is necessary to reshape the sector to take advantage of Brazil’s potential of being the fifth largest oil derivatives market in the world.

According to Félix due to the extension of the country and the distance between consumer centers and production poles, Brazil is an attractive location for the implementation of new private refineries.

“Today [state-owned] Petrobras is seeking to reach de-leveraging targets, to have a better financial health. There is a refining deficit that has not happened for a long time and this deficit has to be met. We have to have clear, robust rules that will reassure investors. Be it state or private, investors will come,” concluded Félix.