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Petrobras to Buy Stake in Texas Refinery

Posted on: Friday, 3 February 2006, 21:00 CST

By ALAN CLENDENNING

SAO PAULO, Brazil - Brazil's state-owned oil company announced Friday it will pay $370 million (306.8 million euros) for a 50 percent stake in a Texas refinery as part of its plan to expand into the United States.

Petroleo Brasileiro SA, or Petrobras, will buy the stake from Astra Oil Trading NV, a division of Belgium's Transcor International NV.

The refinery in Pasadena, Texas, can process 100,000 barrels of petroleum products daily and is being upgraded to handle more, Petrobras said in a statement.

The Latin American energy titan, which will operate the refinery with Astra, is seeking direct access to the huge North American market.

Within four years, the refinery will have the capacity to process about 70,000 barrels of heavy crude oil daily, some of which could come from a Petrobras field off the coast of Rio de Janeiro.

"This acquisition is in line with Petrobras's strategic plan that aims at consolidating the company as an integrated energy firm with a strong international presence, expanding its refining and sales activities, both at home and abroad," Petrobras said.

Petrobras expects to become a net oil exporter this year for the first time as domestic production surges. The company says it will produce an average of 1.91 million barrels of oil a day in 2006, up from an average of 1.68 million in 2005. Brazil's domestic oil consumption is estimated at 1.85 million barrels daily.

Petrobras is making a good investment with the purchase, said oil analyst Mark Routt of Energy Security Analysis Inc.

The refinery has good access to shipping routes, he said, although there are lingering concerns about environmental liabilities from the refinery and a history of strikes by refinery workers.

Petrobras' strategic plan calls for the company to produce 100,000 barrels of oil equivalent in the Gulf of Mexico starting in 2010.

The company plans to spend $8 billion over the next five years to upgrade its refinery facilities and improve the quality of its petroleum derivatives for export to the United States. Currently, Petrobras' refined products don't meet U.S. standards for sulfur content.

Source: Associated Press/AP Online

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