(Adds statements by Petrobras and Ultrapar)
By Sabrina Valle and Carolina Mandl
RIO DE JANEIRO/SÃO PAULO, Jan 18 (Reuters) - Brazilian group
Ultrapar Participacoes SA is leading talks to acquire
Petrobras' refinery Refap in the state of Rio Grande
do Sul, both companies said in filings, confirming the
negotiations first reported by Reuters earlier on Tuesday.
Brazil has been trying sell eight refineries, which would
end Petrobras's virtual monopoly in the country's refining
sector and open one of the world's largest fuel markets to
private investors. Petrobras is currently negotiating six of
them and is expecting two more offers by the end of the first
quarter, the company said in a filing.
Petroleo Brasileiro SA, is trying to get Ultrapar
to boost its offer before agreeing to exclusive talks, three
people close to the deal said. Offers below Petrobras's initial
price range have made the company miss its internal deadline to
sign a deal by the end of 2020.
Ultrapar said Refap would be complementary to its portfolio,
helping increase efficiency. In the oil and gas sector, Ultrapar
controls fuel distributor Ipiranga, gas distributor Ultragaz and
bulk storage company Ultracargo.
Raízen, a joint venture between Royal Dutch Shell PLC
and Brazilian ethanol producer Cosan SA, has
also bid for Refap, two of the sources said. A second round of
offers has not been ruled out, the people said.
Raízen declined to comment.
Indian conglomerate Essar Group, which had pre-qualified for
the binding phase, dropped out of the competition, the people
said.
Ultrapar and Raizen have also bid for refinery Repar, which
supplies the relatively affluent states of Parana, Santa
Catarina, Sao Paulo and Mato Grosso, the sources said. Petrobras
has hesitated to designate a winning bidder because it considers
the prices too low, three of the people said.
In its filing, Petrobras said it has received binding offers
and is analyzing them.
Refap and Repar are located in Brazil's southern region and
have a production capacity of 200,000 barrels per day each, or
about 18% of the country's capacity.
Antitrust rules would bar Petrobras from selling the units
to the same firm.
Elsewhere, Petrobras is in exclusive talks with Abu Dhabi
investor Mubadala Investment Co to sell its Bahia unit RLAM.
Those talks, at a more advanced stage, could bring a deal as
soon as this month, two of the people said.
Petrobras said on its statement on Tuesday night it is
expecting final offers from all RLAM competitors based on the
contract terms set with Mubadala.
No prices were disclosed.
The producer has also received binding offers for its
refining units Reman, Lubnor and SIX, the company said in the
filing. No exclusivity was set, which allows rebids, one person
said.
Petrobras expects binding offers for its Pernambuco refinery
RNEST and Minas Gerais state refinery REGAP by the end of the
quarter.
DIVESTMENT PLANS
Petrobras has been trying to sell refineries for almost a
decade with no success, facing resistance from politicians,
union workers and local contractors. A history of government
fuel price intervention has also scared away investors in the
past.
Chief Executive Roberto Castello Branco, who took office in
January 2019 appointed by President Jair Bolsonaro, relaunched
the process as part of a plan to focus on deep-water exploration
and cut debt.
On December 2019, Petrobras signed an agreement with
antitrust watchdog Cade to privatize eight refineries, or about
half of Brazil's fuel production capacity, by December 2021.
Petrobras has told potential buyers it is not obliged to sell
the plants if offers fall below its internal price range.
A decrease in fuel demand accelerated by the Covid-19
pandemic is a key reason behind the price gap between Petrobras
and potential buyers, three of the people said.
The sales will also allow Petrobras to raise fresh money and
reduce debt.
(Reporting by Sabrina Valle, in Rio, and Carolina Mandl, in Sao
Paulo; Editing by David Gregorio and Marguerita Choy)
