Petrobras Signs Sale Contract for the Isaac Sabba Refinery

Source: 8/25/2021, Location: South America

Petrobras signed with Grupo Atem, the contract for the sale of the Isaac Sabbá Refinery ( REMAN), in Manaus, Amazonas, and its associated logistical assets for the amount of US$ 189.5 million (R$ 994.15 million*). The refinery is the second among eight that are in the process of sale to have the contract signed. On March 24, the sale contract for the Landulpho Alves Refinery (RLAM) in Bahia was signed. The sale of REMAN is in line with Resolution No. 9/2019 of the National Energy Policy Council, which established guidelines for the promotion of free competition in the country's refining activity, and is part of the commitment signed by Petrobras with CADE for opening of the refining sector in Brazil.

REMAN's divestment process, approved by Petrobras' Board of Directors on this date, strictly followed the Divestment System approved by the Federal Court of Accounts (TCU). The refinery's divestment project was approved at all levels of Petrobras' corporate governance.

Rodrigo Costa, Petrobras' Refining Director, highlighted the importance of the operation: “The signing of the REMAN sales contract represents another important step in the process of repositioning Petrobras' refining activity. The company is investing to become more competitive and to position itself among the best refiners in the world, in terms of efficiency, operational performance and high quality products”, explains Costa.

After the sale of the eight refineries, as per the commitment signed with CADE, Petrobras will remain the largest refiner in the country, with a refining capacity of 1.15 million barrels per day (bpd), with a focus on fuel production more efficient and sustainable in the units closest to oil production and the largest consumer centers. For this, Petrobras will invest in technologies to make its refineries doubly resilient, both from an environmental and an economic point of view. The projection is to double, in 5 years, the offer in these refineries of Diesel S-10, with lower emission, and at increasingly competitive costs.

Based on the commitment signed with CADE, Petrobras defined the assets to be sold in refining, through strategic portfolio management. In this process, Petrobras is disinvesting to invest more and better, focusing on new challenges, such as in the pre-salt deep and ultra-deep water fields and on technological innovations in the remaining refining park. The company is investing to transform resources into wealth, with gains reverting to society as a whole. Investments have been systematically greater than divestments, making Petrobras an even stronger company.

According to Miqueias Atem, shareholder and one of the founders of ATEM, the portfolio management that has been implemented by Petrobras for the refining market makes it possible to reduce concentration and stimulate competition in the sector. “The entry of new players makes it possible to break paradigms, capturing synergies and giving economic-financial viability to previously neglected projects. The acquisition of the refinery will make it possible to improve the supply of fuels and oil and gas derivatives to the Refinery's region of influence. We will do this efficiently from a logistical point of view and under equal commercial conditions, always aiming at optimizing the fuel market and in the best interest of those who operate in this market.”

Next steps

After the completion of the operation, Petrobras will continue operating the refinery through a service provision contract for a transitional period (Transition Service Agreement – ??TSA) while the buyer structures its processes and assembles its teams. This will happen under a service provision agreement, avoiding any operational interruption. Petrobras and ATEM reaffirm REMAN's strict commitment to operational safety in all phases of the operation. Measures were taken so that there is no interruption in the supply of natural gas, oil and LPG in the region.

Petrobras employees who decide to remain in the company may choose to transfer to other areas of the company. Another possibility is joining the Voluntary Termination Program, with a benefits package. Petrobras has been conducting the divestment processes with transparency and respect for employees. The company publicizes the main stages of the process internally and externally and gives full support to the professionals involved. No Petrobras employee will be dismissed as a result of the transfer of control from REMAN to the new owner.

Through the management of its portfolio, Petrobras actively contributes to building a more competitive and dynamic economy and supports the idea of ??new companies entering the Brazilian oil and gas refining and exploration and production market. At the same time, the company will continue to invest to be among the best refiners in the world, in terms of efficiency, operational performance and high quality products.

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