Petrobras’ privatized refinery has a dispute with the state-owned company at Cade | Economy

Brazil Agency

Mataripe, Petrobras’ first privatized refinery, has a dispute with the state-owned company, which arrived at Cade

55 kilometers from Salvador, the Mataripe Refinery, in the municipality of São Francisco do Conde, in Bahia, faces a scenario that illustrates the country’s difficulty in creating competition in the fuel area, historically dominated by Petrobras.

Six months after becoming the first state-owned refinery to be taken over by a private company — Acelen, from the Mubadala fund, in the United Arab Emirates — the unit has difficulty competing with the former owner. It sells gasoline and diesel at prices above the national average and is in conflict with Petrobras, which reached the Administrative Council for Economic Defense (Cade). The agency opened an investigation against the state company for “possible anti-competitive practice”.

Unlike Petrobras’ refineries, Acelen’s has passed on to distributors practically in real time the fluctuations in the international price of oil, which last week returned to break US$ 120 per barrel.

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Data from the National Petroleum Agency (ANP) show that a liter of gasoline in Bahia costs, on average, R$7.57, above the national average of R$7.21. The same occurs with diesel, whose average price of R$ 6.95 in Bahia exceeds the national price of R$ 6.88. The state has led the ranking of the ANP survey with the most expensive fuel in the country.

This difference generated complaints from representatives of the Trade Union of Retail Petroleum Derivatives of the State of Bahia to Cade, which regulates competition in the country. The investigation opened by the agency is the 11th involving the state-owned company, in a list that includes suspicions of abuse of a dominant position in the fuel, natural gas and transport infrastructure markets.

Behind the price differential is a dispute between Petrobras and the new owner of the refinery, which accounts for between 12% and 15% of national refining capacity and cost Mubadala US$1.65 billion in 2021.

According to sources familiar with the matter, Acelen was forced to buy crude oil from Petrobras under the terms of the international market, with immediate transfer of the price per barrel, but it has to compete with the other state-owned refineries in the country, which would not be doing this correction in the same intervals and proportions.

Despite being criticized by President Jair Bolsonaro due to the rise in fuel prices and the policy of parity prices with the international market, the state-owned company has practiced values ​​that are out of step with those charged abroad, as sector executives point out.

Calculation on both sides

Thus, in the words of one source, Petrobras would be charging the Bahian refinery a “plus” between US$ 1 and US$ 2 per barrel of oil, the raw material for fuel. In the sector, other state-owned customers, such as Chinese refineries, are said to pay less.

Sought by GLOBO, Petrobras did not comment. Acelen stated that it has a transparent, competitive pricing policy approved by the sector’s regulatory agency and only informed that it will contribute to Cade’s investigation, “including in the discussion of structural issues”. Cade confirmed, in a statement, that it has opened an administrative inquiry to investigate possible practice of price discrimination of gasoline and diesel produced at the refinery as well as in the supply of crude oil by Petrobras.

This issue has generated an impasse between the new owner of the refinery – which was the first in the country and was called Landulpho Alves (Rlam) when managed by Petrobras – and the state-owned company, which could generate a new lawsuit at Cade. This is because the difference between the correction of the prices of the barrel and its fuels by Petrobras could be evidence of a competition problem in the oil and gas sector, as highlighted by one of Cade’s advisors in a public session on May 25th.

This diagnosis can make the process of selling other refineries in Brazil unfeasible because it shows how difficult it is to create a competitive fuel market. In 2019, Petrobras signed an agreement with Cade to sell eight refineries, half of its refining capacity.

Four were sold, and three received offers considered low: Repar (PR), Regap (MG) and Refap (RS). Rnest (PE) had no interested parties. A representative of an international investor says that Cade’s investigation in relation to the state-owned company’s pricing policy generates apprehension when it tries to sell other refineries.

Specialists warn that the state-owned price differential also inhibits importers and increases the risk of a lack of diesel in the country from next month. Without the capacity to produce all the fuel it consumes, Brazil imports 31% of the diesel and 25% of the gasoline sold at gas stations.

No option

CADE’s document to which GLOBO had access reveals concern of the agency’s technicians with suspicions of a “possible practice of anti-competitive conduct” by the state-owned company: “It is plausible, and this may be the subject of investigation, that the distortion refers, in fact, to a possible price discrimination of the crude oil supplier, which may be practicing different prices to the detriment of the represented refinery, favoring the refineries of the economic group itself, with which it has vertical integration”.

Furthermore, the first privatization of a refinery in the country revealed another structural problem: the lack of a crude oil market in Brazil. Until then, production went to Petrobras refineries or was exported. Thus, the other oil companies that operate in Brazil do not have the sale of oil in Brazil in their business plans. prefer to export.

André Carvalho, from Veirano Advogados, highlights the tax issue. He explains that, in the export of oil, there is only an incidence of Income Tax on the profit of the operation. In the case of sales of barrels in Brazil outside the producing state, there is an incidence of PIS/Cofins:

“It is not necessarily an obstacle, but it is undoubtedly an additional cost compared to exports”, he says.

Even though it has been doing business in Brazil for two decades, Mubadala does not seem to have seen this point as a hindrance to the purchase of the refinery. However, according to industry sources, Acelen is now in the “uncomfortable” position of, in practice, only being able to buy oil from Petrobras, its competitor in the market.

As an alternative, it has been importing oil from other countries, but the operation is seen as a complement, since this logistics makes the final product more expensive and prevents Acelen from expanding its share in the Brazilian fuel market. It is with an eye on this equation, says a market source, that Petrobras would be setting the price of oil for Acelen, in line with what it can buy abroad.

“Brazil started the privatization of refineries, but the government’s program has proved to be flawed because Petrobras continues to practice prices below international parity, making competition difficult and generating a risk of shortages. On the one hand, there is a private refinery that practices prices of On the other, the company that operates in an integrated manner (from extraction to production of fuels)”, says Edmar Almeida, a professor at the Energy Institute at PUC-Rio, citing Petrobras’ difficulty in selling refineries. “It is a reflection of the attempt to control prices. Investors put political risk in the price.”

The price of intervention

Valéria Lima, director of the Brazilian Petroleum Institute (IBP), considers that the rise in the barrel, aggravated by the war in Ukraine, and the electoral calendar are complicating the opening of the market. For her, it is necessary to end the noise about attempts to control prices by the government:

“Competition will only come when we have more private refineries, as there will be more buyers for oil. We are in a process that is delayed. The longer we take, the more businesses lose value, since the peak of gasoline consumption in the world will be in next decade and diesel in 20 years.”