Brazil Petrobras cancels second refinery train at Comperj
Simon West
25-Jul-2016
Limited work will begin at an idled refinery in Rio de
Janeiro state, but a second processing train and lubricants
plant are off the list. A state audit carried out in 2014
concluded that the project was riddled with delays, cost
overruns and reckless management. (Photo:
Petrobras)
MEDELLIN, Colombia (ICIS)–The board of Brazil’s Petrobras late on Friday voted to restart limited work at its idled Comperj refinery in Rio de Janeiro state, but has cancelled a proposed second processing train and lubricants plant at the complex.
The board’s decision was taken during a re-evaluation of the project during which it was agreed that work would continue on units associated to Comperj’s $2bn natural gas processing plant, the state-controlled energy giant said.
The board also voted to postpone spending on other units at a first 165,000 bbl/day processing train until December 2020, and called for continued efforts to seek partners willing to invest in the project.
The board’s decision is the latest in a series of setbacks that have afflicted Comperj, a project first announced in 2004.
The original plans foresaw a massive petrochemical complex, two refineries, a world-scale cracker and several downstream units.
Operations were meant to have begun in 2011.
A state audit carried out in 2014 concluded that the project was riddled with delays, cost overruns and reckless management, as well as accusations of risk-taking and a disregard for standard operating procedures by Comperj’s management.
Brazil-based Braskem announced in February last year that it was pulling out of the petrochemical section of Comperj, citing higher potential returns in updating existing plants, rather than building a new one from scratch.
The petrochemical section would have been the largest Latin American chemical complex ever built.
Meanwhile, the construction of the refinery’s first train was postponed indefinitely in April 2015 due to a decline in oil prices, a devaluation of the Brazilian real and the fallout from the so-called Lava Jato probe into a massive corruption scheme involving graft and money laundering at Petrobras, the company said.
Comperj’s general manager, Valter Shimura, last month told Brazil’s lower house that spending on the project has already reached a staggering $14bn.
According to Shimura’s testimony, construction of Comperj’s first – and now only – train was 86% complete, while work on the gas processing units was 36% complete.
Those units would form part of the infrastructure needed to transport and process natural gas from the pre-salt reserves in Brazil’s Santos Basin, Petrobras said.
Some $500m has already been invested in the units, while an additional $1.5bn would be required to complete the work, Shimura said.
The consortium responsible for the gas units, led by engineering firm Queiroz Galvao, in September last year halted work amid what it called “unsustainable impacts” related to Brazil’s economic crisis.
Petrobras rescinded the consortium’s contract in March.
During Friday’s meeting, the Petrobras board agreed to continue procurement activity to complete an emissions reduction (SNOX) unit and other construction work at its Abreu e Lima refinery (RNEST) in northeast Pernambuco state.
RNEST’s first train began operations in December 2014, and is currently processing 100,000 bbl/day. The train will reach its full capacity of 115,000 bbl/day once the SNOX unit has been installed, Petrobras said.
The construction of the unit, which is 70% complete, was halted in 2014 after Petrobras rescinded a contract with the unit’s builder, EBE-Alusa, amid a dispute over payments.
A decision on implementing the refinery’s second 115,000 bbl/day train will be taken in due course, the company said.
The costs of RNEST, which has been dogged by technical and contractual problems, have soared to $20bn, five times its original budget.
Last month, Brazil’s federal audit court, the TCU, said it had evidence that 16 companies had allegedly formed a cartel to fix contracts during the construction of RNEST.
The investigation into the alleged Brazilian reais (R) 1.9bn scam ($580m) is part of the wider Lava Jato probe.
Lava Jato, Portuguese for “car wash”, has already led to the conviction of some of Brazil’s most powerful business leaders, including Marcelo Odebrecht, the former CEO of Brazil’s biggest industrial conglomerate, Odebrecht.
In related news, Petrobras announced late on Friday that it had signed a final agreement to sell its Chilean fuel distribution company to private equity group Southern Cross for an estimated $464m.
The sale of Petrobras Chile Distribucion (PCD) is part of the company’s previously announced divestment programme, which foresaw asset sales of $15.1bn from 2015-16.
PCD has 279 gas stations, eight distribution terminals, operations at 11 airports, stakes in two logistics companies and one lubricants plant, according to Petrobras.
($1 = R3.28)
SMALL IMAGE: A gas storage sphere at Comperj. (Photo: Petrobras)
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