Brazil's Petrobras to spend record $460 million on refinery work in 2022

Brazilian state-led oil company Petrobras plans to boost spending on refinery maintenance to record levels in 2022 amid ongoing refinery sales and ULSD expansion projects, the company said Jan. 19.

Petrobras expects to spend $460 million in 2022, topping the previous record of $420 million set in 2021. Despite the shutdowns, Petrobras said that refinery utilization reached the highest in five years at 83% of capacity in 2021.

The spending comes amid a restructuring in Petrobras' refining portfolio after a 2019 antitrust agreement ended the company's monopoly in Brazil's refining segment. Petrobras agreed to sell eight of the company's 13 operated refineries in a deal with regulators.

Petrobras has so far sold one refinery and signed sales agreements to sell two additional units. Two refinery sales remain pending, while Petrobras expects to restart the sales process for three additional refineries in the second half of 2022, likely after October's presidential elections.

The shutdowns in 2021 led to inspections and maintenance work on more than 4,000 pieces of equipment, Petrobras said.

"Petrobras plans an even bigger challenge for the year 2022, in which spending is estimated on the order of $460 million on maintenance shutdowns of units at its refineries, which will involve around 4,500 pieces of equipment," the company said.

The maintenance spending is part of a broader plan to invest $6.1 billion in Petrobras' refining system over the next five years. That includes three major projects in the 2022-2026 strategic plan aimed at increased production capacity, "especially of high-quality refined products such as ULSD," Petrobras said.

The plan, released in November, included the surprise announcement that Petrobras would complete the second refining train at the Refinaria do Nordeste, or RNEST, plant in Pernambuco state. The project will add about 95,000 b/d in ULSD output, Petrobras said.

The $1.2 billion project will bring the refinery, which is also known as Abreu e Lima, up to its initially planned full capacity of 260,000 b/d by 2027, according to Petrobras. RNEST is currently limited to processing about 100,000 b/d by regulators because the unit's full suite of air-emissions equipment was never installed.

Petrobras also plans to integrate the Refinaria Duque de Caxias, or REDUC, in Rio de Janeiro state with the nearby GasLub Itaborai lubricants facility. That project will add 93,000 b/d of ULSD and jet fuel output as well as 12,000 b/d of high-quality lubricants production, according to Petrobras.

A new hydrotreatment facility will also be installed at the Refinaria de Paulinia, or REPLAN, in Sao Paulo state, while Petrobras plans adjustments at REDUC and the Refinery Henrique Lage, or REVAP, in Sao Paulo. The three projects combined were expected to add 132,000 b/d of ULSD output, according to the company.

"The projects to be implemented will position the company among the best refiners in the world in terms of efficiency and operational results, with a focus on high-value products and lower carbon emissions," Petrobras said.

3R Petroleum talks

In a separate statement, Petrobras said that it expected to complete negotiations to sell a cluster of oil fields in Rio Grande do Norte state to upstart 3R Petroleum in January. Petrobras and 3R Petroleum entered exclusive talks about the Polo Potiguar group of 22 onshore and shallow-water offshore concessions in August 2021.

3R Petroleum, which has made several deals with Petrobras since 2019, made the best proposal at a value of more than $1 billion, according to Petrobras.

In addition to the production fields, the deal also includes a small processing facility known as the Refinaria Clara Camarao, or RPCC, and three natural gas processing plants.