The acquisition of the Pasadena refinery in the US was not the only controversial deal Petrobras made in its international foray. The purchase of a refinery in Okinawa, Japan, in 2007, one year after the Pasadena transaction, is also marked by a history of frustrating results and production promises that, as the state-controlled oil company admits now, were impossible to be fulfilled.

When it announced the deal, Petrobras said it had acquired 87.5% in the Nansei Sekiyu Kabushiki Kaisha (NSS) refinery, located on Okinawa island, for the approximate cost of $50 million. The transaction was agreed upon with Tonen General Sekiyu, an ExxonMobil subsidiary. The refinery would have capacity for 100,000 barrels a day, the same of the Pasadena, Texas unit. It was this capacity that theoretically justified Petrobras’s investments and future plans for the region.

In April 2008, the state company, then helmed by José Sergio Gabrielli, had announced that the plant was producing about 35,000 barrels a day, but that it would “gradually increase production until full capacity, aiming, in addition to the Japanese market, to reach Singapore, Vietnam and Malaysia, among others.”

As it happens, environmental and technical restrictions and security rules imposed by Japan meant that the Okinawa refinery was simply unable to reach the full 100,000 barrels capacity. This is today admitted by Petrobras. Questioned about the matter, the company told Valor that, “despite the nominal capacity of the refinery being 100,000 barrels a day, the maximum processing is 53,000 barrels a day, in compliance with limits set by local legislation related to environmental impacts (Energy Law).”

The history of effectively processed crude in the refinery since Petrobras got into the operation confirms these limitations. In 2009, the production in Okinawa was 45,000 barrels a day. In 2010, it fell to 41,000. In the three following months, it was 47,500, 50,000 and 39,000 barrels a day, respectively.

The Okinawa negotiation underwent scrutiny of the same executives and board members that approved the Pasadena purchase: Mr. Gabrielli was the CEO, while Dilma Rousseff, then Chief of Staff, was chairman of Petrobras. Nestor Cerveró, accused by President Rousseff and Graça Foster, the current Petrobras CEO, of having omitted important clauses in the Pasadena deal, was also in charge of the company’s international department.

As occurred in Pasadena, the Okinawa contract included a put provision that sets rules for the exit of one partner in the business. The Petrobras partner in the refinery, trading company Sumitomo, which had 12.5% in the operation, exercised the put provision, as did Belgian company Astra Oil in Pasadena.

In April 2010, Petrobras acquired Sumitomo’s stake in the refinery. The transaction was concluded October that year for $29 million. This amount had until now not been revealed by the state company.

Having spent over $80 million in Okinawa, Petrobras also invested $111 million in the Japanese plant, but never achieved what it announced when it acquired the refinery: increasing its production capacity to 100,000 barrels a day. In 2010, the company retained Odebrecht to conduct a restructuring plan for the Okinawa unit. By contract, another $91.3 million would be spent in the refinery. But the plan was aborted in 2012 by Ms. Graça Foster, who decided to exclude Japan from the service contract signed with the construction group.

Petrobras has had opportunities to shed itself of the Okinawa refinery, an intention that it made public at some point, but ended up deciding to keep the operation. In March last year, a Valor story revealed that Petrobras had received a $650 million offer for the unit. A Singapore-based company was the interested party. The offer included $80 million for the refinery and $570 million for the inventory (crude and fuels) stored in the facility. In addition to the refinery, Okinawa has a storage terminal for crude and oil products with capacity for 9.6 million barrels, three piers with potential to receive vessels of up to 97,000 tonnes and a single-buoy mooring for ships of up to 280,000 tonnes. Petrobras didn’t agree to the deal.

In 2009, the state company began the production of gasoline with a 3% ethanol mix in Japan, in partnership with Japan Alcohol Trading. Mr. Gabrielli said that the Okinawa province would be turned into an “ethanol-distribution hub for Japan and Asia.” The refinery would be the gasoline supplier for fuel production, but the business didn’t take off.

Questioned whether Okinawa is still part of the assets it intends to sell, Petrobras said the refinery “is no longer considered a strategic asset for Petrobras, which is analyzing alternatives for the business.”