The National Agency of Petroleum, Natural Gas and Biofuels (ANP) sees room for the construction of refineries in Brazil in the future. According to the director general of the municipality, Décio Oddone, the potential expansion of the Brazilian refining park in the long term is due to the deficit in the country's fuel trade balance.

According to agency data, the importation of gasoline A (produced in refineries before the addition of anhydrous ethanol) accounted for 11% of domestic sales of the product in 2018, 28 billion liters. In the case of diesel oil before the addition of biodiesel, external dependence was even higher, at 23%, considering a total domestic sales of 50.2 billion liters. And, in relation to liquefied petroleum gas (LPG, known as cooking gas), the imported volume accounted for 33% of total sales of 13.3 billion liters. Consolidated fuel market data for 2019 is expected to be released in the first quarter of this year.

Brazil currently has a total of 17 refineries, with processing capacity of approximately 2.3 million barrels of oil per day. Petrobras accounts for 98% of the Brazilian refining market.

To ensure the expansion of the country's refining park, Oddone understands that it is necessary to maintain price parity with the international fuel market. "To build refineries, there have to be investments. And, to have investments, there has to be attractiveness. The price has to be international. I don't see how to escape this logic," the director told Valor.

Before an expansion of refining capacity in Brazil, however, the short and medium term movements should be of acquisitions of units already operating in the country, under the Petrobras divestment plan. The company has put up eight refineries for sale, accounting for 1.1 million barrels of oil per day.

The first package includes the Abreu e Lima (RNEST) refineries in Pernambuco; Landulpho Alves (RLAM), in Bahia; President Getúlio Vargas (Repar), in Paraná; and Alberto Pasqualini (Refap) in Rio Grande do Sul. Petrobras expects to receive the binding offers to buy these projects in March.

In December 2019, Petrobras President Roberto Castello Branco said that during the non-binding offer stage, Petrobras received about five proposals per refinery.

The second group of assets involves the Gabriel Passos (Regap) refineries in Minas Gerais; Isaac Sabba (Reman), in the Amazon; Northeast Lubricants and Oil Derivatives (Lubnor), in Ceará; and Schist Industrialization Unit (Six), in Paraná.

In recent years, the expansion of the Brazilian refining park was based on the implementation of Rnest's second train (step) and the construction of the Comperj refinery in Rio de Janeiro. Both projects, however, were canceled by Petrobras. In the case of Comperj, the state-owned company abandoned the project and is now working with the possibility of building a thermoelectric park in the region.

Regarding Rnest's second train, the Energy Research Company (EPE) foresees the start of operation of the project in 2024. The estimate is contained in the preliminary version of the 2029 Ten Year Energy Expansion Plan (PDE).

Determined to sell the venture, however, Petrobras did not include in its business and management plan 2020-2024 investments for the implementation of the second train of Pernambuco refinery. The unit operates today with a capacity to process 130,000 barrels of oil daily. Adding the second step would double this capacity.

According to Oddone, a possible scenario of fuel self-sufficiency in the country in the future will also favor a structural effect of oil price reductions. In this case, instead of practicing import parity, which is a slight increase over that of the Gulf of Mexico, by including transport costs, Brazil would use export parity of derivatives. In practice, the export parity price is lower than the value in the Gulf of Mexico because it has no delivery costs.

"That would be the structural way to bring down the price of the derivative. But for that we need to build refineries," added the ANP director general.