Brazil refinery makes counteroffer to avert expropriation

Mon Oct 22, 2012 6:29pm IST

Stocks

   

* Refinery offers to sell part of land for $173 mln

* Manguinhos says offered land does not need clean-up

* Brazilian state issued expropriation order last week

RIO DE JANEIRO, Oct 22 (Reuters) - Brazil's Refinaria de Petroleos Manguinhos SA has offered to sell part of its property to the government of Rio de Janeiro state for 350 million reais ($173 million) in an effort to stave off expropriation, the company said on Monday.

The offered property represents about 20 percent of the company's land, which is near downtown Rio de Janeiro and the city's port. The sale of the roughly 25-acre (10-hectare) plot would allow the 60-year-old refinery to continue operating, Manguinhos said in a statement.

Manguinhos is the only Brazilian refinery not controlled by state-led oil company Petrobras. It also has some of the only non-Petrobras oil terminal and storage facilities near Brazil's rapidly expanding offshore oil frontier in the Campos and Santos basins.

Unlike much of the refinery site, the land Manguinhos proposes to sell is not contaminated with petroleum waste and can be used immediately for the construction of public housing, the statement said.

The sale would also allow Manguinhos to proceed with a 1.4 billion real investment plan to more than triple its oil and fuel storage facilities to 6.5 million barrels from 1.8 million barrels.

The government of Rio de Janeiro state last week said it would expropriate the refinery to build public housing as part of a shantytown renovation project in communities that have sprung up around the plant.

As a result of the order, Manguinhos asked for trading of its shares to be suspended. The company also said the order had forced the suspension of talks with Sinopec , China's No. 2 oil company, to take part in the tank-storage expansion plan.

Rio de Janeiro state officials were not immediately available for comment.

The company's common stock last traded on Oct. 11, when it closed at 84 centavos on the Sao Paulo stock exchange. The company's preferred shares closed at 66 centavos the same day.

At those prices the company's market value is about 755 million reais.

($1 = 2.0277 Brazilian reais) (Reporting by Jeb Blount; Editing by Dale Hudson)

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