Petrobras: Refinery Buyback Raises Political Risk and May Compromise Dividends

In Short:

Petrobras (PETR4) is in negotiations to repurchase the Mataripe refinery in Bahia, which was sold during the Bolsonaro administration. This potential buyback raises political risk and could compromise dividends. The refinery purchase raises concerns about potential political intervention, as the federal government has criticized the company's asset sales.

Petrobras's current strategic plan projects an additional capex of up to $11 billion for mergers, acquisitions, and other investments between 2024 and 2028. However, the Mataripe refinery buyback could limit the scope of extraordinary dividends in the short term. The refinery, with a capacity to refine 333,000 barrels per day, was sold in 2021 for $1.65 billion, but the buyback value will likely be higher due to the improvements made.

Under President Luiz Inácio Lula da Silva, refining investment has regained importance. The upgraded Mataripe refinery may have a repurchase value above the $1.65 billion paid by Acelen in 2021. There is a possibility that Acelen will retain a 20% stake, though a full acquisition by Petrobras is more likely. The deal is expected to be finalized in 2025.