Opinion – Samuel Pessôa: Still Petrobras’ refining costs

In the August 20 column, I documented that, between 1954 and 2002, Petrobras invested US$ 27 billion (R$ 142.7 billion) in the construction of refineries, at 2012 prices, and expanded refining capacity by two million barrels per day. From 2003 to 2016, it invested US$ 100 billion (R$ 528.7 billion), and the expansion was 400 thousand barrels per day.

UFRJ professor Eduardo Costa Pinto stated that I made a mistake. The US$ 27 billion from 1954 to 2002 and the US$ 100 billion from 2002 to 2016 were used for the expansion of refining capacity, but also for transport, mainly vessels of the Petrobras shipowner, Transpetro, and for the improvement of existing refineries. . The improvement means investments to meet stricter environmental criteria, both for refineries and for the oil products produced, as well as changing the combination of derivatives manufactured with a view to meeting economic objectives.

So the teacher’s criticism is correct. To move forward, we have to look more carefully at investment in transport and in the modernization of refineries.

According to data from the Transpetro website, the company’s transport capacity in 2003 was 2.7 million tons. In 2006, it rose to 4.6 million, a growth of 70% compared to the existing capacity in 2003 (which is less than the investment made until then, because there is depreciation — ships last around 25 years). Thus, 70% of the existing capacity in 2003 corresponds to a much smaller investment than all that was invested between 1954 and 2002.

Thus, the spending of US$ 100 billion between 2003 and 2016 was not a huge waste if the investments in improving refineries are profitable.

The Landulpho Alves refinery, in the Bahian Recôncavo, known as Rlam, was one of the modernized units. Rlam was privatized at the end of 2021. The price paid was just under US$5,000 for a barrel per day of refining capacity.

Rlam’s market selling price incorporates all the beneficial effects on the refinery’s private profitability of the investments made in modernization.

In article in SheetProfessor Eduardo informs us that the cost of investment by Petrobras in the period of great expansion of investment in refining in the 2000s was US$ 60 thousand (R$ 317.2 thousand) per barrel per day of refining capacity, a little more 12 times the market price of a recently modernized refinery.

Was there an error in the Rlam sales process? It doesn’t seem to be the case. Other refineries have been sold in recent years at prices lower than Rlam. In particular, the Bolivian government paid for refineries purchased from Petrobras in 2007 at US$1,200 per barrel per day of refining capacity.

Unless there are huge gains for Petrobras from the internalization of refining, to the point of offsetting an extra cost of up to 12 times, it is not worth it for Petrobras to invest in the refining activity.

In his column on Thursday (15), Nelson Barbosa, former Minister of Finance and my colleague at FGV Ibre, defended that the new Lula government, if it wins, resume a policy of industrial development.

According to Nelson, there are cases of failure, such as the information technology policy, and cases of success, such as Embraer, and open cases, such as the automobile and naval industries.

The auto and shipping industries are two cases of failure. Both, after more than 60 years of public policies, cannot survive under market conditions. If 60 years isn’t enough for a nascent industry to mature, I don’t know how long it would be.

The first step in preventing a new PT national-developmentalist test cycle from working is that technicians linked to the party do not have the ability to make a correct diagnosis.