Petrobras, a global leader in the petroleum industry, said on Wednesday that it has signed an agreement for the sale of its Landulpho Alves Refinery (RLAM) and its associated logistics assets, in the state of Bahia, to Abu Dhabi-based Mubadala Capital for $1.65 billion.

The signing of the sale and purchase agreement will take place soon, it added.

The agreement provides for purchase price adjustment due to changes in net working capital, net debt and investments until the closing of the transaction, and the operation is subject to approval by the Administrative Council for Economic Defence (CADE).

The refinery will be the first of the eight that are being divested by Petrobras to have its sale and purchase agreement signed. The sale of RLAM is in line with a resolution of the National Energy Policy Council, which established guidelines for the promotion of free competition in the national refining sector, and is reflective of the commitment signed between Petrobras and CADE in June 2019 to open the refining sector in Brazil.

Besides RLAM, the divestment processes of the other seven refineries are still in progress, as announced on February 8, 2021.

The RLAM divestment counted on fairness opinions from Citibank, Rotschild, and Santander banks, technical opinions from the global consulting firm IHS-Markit and the Fundação Getulio Vargas, and a legal opinion from Dr. Francisco Costa e Silva, former president of the  Brazilian Securities and Exchange Commission and a specialist in Corporate Law.

Roberto Castello Branco, CEO of Petrobras, commented: "Today is a very happy day for Petrobras and Brazil. It is the beginning of the end of a monopoly in an economy still with monopolies in several activities. The divestment of RLAM contributes to the improvement of capital allocation, reduction of the still high indebtedness and to start a process of reducing the risks of political interventions in fuel pricing, which caused so much damage to Petrobras and to the Brazilian economy itself. The transaction undoubtedly satisfies the best interests of Petrobras' and Brazil's shareholders."

This disclosure to the market is in accordance with Petrobras' internal rules and with the special regime for divestment of assets by federal mixed economy companies, provided for in Decree 9,188/2017.

The transaction is in compliance with the current strategic plan and it is aligned with the optimization of the portfolio and the improvement of the company's capital allocation, aiming to generate value for our shareholders.

RLAM, located in São Francisco do Conde in the state of Bahia, has a processing capacity of 333,000 barrels/day (14% of Brazil's total oil refining capacity), and its assets include four storage terminals and a set of pipelines that connect the refinery and the terminals totalling 669 km in length. – TradeArabia News Service