August 27, 2019 / 1:20 AM / 2 months ago

Exclusive: Brazil's Petrobras refineries sale lures trading companies, PetroChina, Saudi Aramco - sources

SAO PAULO/RIO DE JANEIRO (Reuters) - Brazil’s planned privatization of eight Petroleo Brasileiro SA (PETR4.SA) refineries has lured several of the world’s largest trading and oil companies as prospective bidders, two sources with knowledge of the matter said.

FILE PHOTO: A logo of the Brazil's state-run Petrobras oil company is seen in Rio de Janeiro, Brazil March 25, 2019. REUTERS/Sergio Moraes/File Photo

Around 20 companies have signed non-disclosure agreements granting them access to the refineries’ data and signaling that they are considering a bid, the sources added, speaking on condition of anonymity to disclose private details of the sale.

The first round of non-binding offers for four of the eight refineries Petrobras put on the block is due on Oct. 11, the sources said. The eight refineries have total capacity of 1.1 million barrels per day.

Among the potential bidders are trading firms Vitol SA, Glencore PLC (GLEN.L) and Trafigura AG. Local companies Ultrapar Participações SA (UGPA3.SA) and Raizen, a joint venture of Brazil’s Cosan SA (CSAN3.SA) and Royal Dutch Shell (RDSa.L), also signed non-disclosure agreements.

Other companies interested, according to the sources, include PetroChina Co (601857.SS) and Sinopec (600688.SS), which already has a Brazilian joint venture with Spain’s Repsol (REP.MC). Oil behemoth Saudi Aramco, which is planning one of the world’s largest initial public offerings, is also looking at the refining units’ numbers.

The request to access the data room is just the first step of companies interested in the deal, and does not mean they will deliver bids on Oct. 11.

Petrobras, PetroChina, Ultrapar, Sinopec and Vitol did not immediately comment on the matter. Raizen, Trafigura, Saudi Aramco and Glencore declined to comment.

TRANSFORMATIVE DEALS

The deal, to be one of Petrobras’ largest divestitures ever, would transform Brazil’s oil industry and may raise around $18 billion, bankers working on the deal say. Refining has traditionally been state-owned in Brazil, triggering occasional calls for government price controls.

At least partial privatization is widely seen as one of the best possible ways to bring real competition to the Brazilian oil industry.

Antitrust watchdog CADE has already forced Petrobras to change its refinery sale process to boost competition, demanding the separate sale of each of the eight refineries. A single buyer will be barred from buying two of the largest refineries in the same area, whether it be the northeast, the south or the southeast.

Petrobras is also carving out logistics assets, such as oil pipelines and terminals, to sell along with the refineries, one of the sources said.

Most of the bidding groups are expected to include private pipeline operators, possibly including France’s Engie (ENGIE.PA) and Canada’s Brookfield (BAMa.TO), one of the sources said, explaining that oil companies are reaching out to them. Both companies recently acquired Petrobras assets.

Reporting by Tatiana Bautzer in Sao Paulo and Rodrigo Viga Gaier in Rio de Janeiro; Editing by Christian Plumb and Leslie Adler

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