By JEFF FICK
RIO DE JANEIRO -- Brazilian state-run oil company Petroleo Brasileiro, or Petrobras, said late Tuesday that it could team with China Petroleum & Chemical Corp. to build a much-needed refinery that would help reduce heavy imports of gasoline and diesel.
Petrobras and Sinopec, as the Chinese firm is also known, signed a letter of intent to study a possible joint venture to build the Premium 1 refinery in the northeastern Brazilian state of Maranhao. Petrobras announced a similar joint-venture study to build the Premium 2 refinery in nearby Ceara state with South Korea's GS Energy Corp. on June 10.
Brazil desperately needs to increase refining capacity as growing consumption of gasoline and diesel outpaces current processing capacity of slightly more than 2 million barrels per day. The refining shortfall has forced Petrobras to import heavy amounts of the two fuels over the past two years, severely undercutting the company's profits.
Petrobras is currently building two refineries, Comperj in Rio de Janeiro state and Abreu e Lima in Pernambuco state. Abreu e Lima, the first of the already delayed projects, won't be ready until November 2014 at the earliest.
Despite the added refining capacity, Petrobras still estimates consumption will outpace refining capacity by nearly 1 million bpd in 2020 without the two so-called "premium" refineries.
Refining accounts for about 27% of Petrobras's $237 billion 2013-2017 investment plan.
The two premium refineries aren't expected to be complete before 2017 or 2018, a timetable that will force Petrobras to make a final decision on the two projects by July, CEO Maria das Gracas Foster said in an interview earlier this year.
Premium 1 will process 300,000 bpd initially, but there are plans to eventually expand the refinery by another 300,000 bpd in 2020. Premium 2 will be able to process about 300,000 bpd when completed.
Dow Jones Newswires