Brazilian state-owned oil and gas major Petróleo Brasileiro SA (Petrobras) has approved the end of the competitive procedure for its latest attempt to sell its wholly-owned nitrogen fertilizer plant, Araucãria Nitrogenados, known as ANSA, in the southern Brazilian state of Paraná, the company said in a Dec. 19 statement. The sale, according to the statement, was in the binding phase.
Brazil’s Valor Econômico on Dec. 19 reported that Norwegian crop nutrition major Yara International ASA had given up on buying the ANSA unit, a deal that came near to being closed earlier this year for around $50 million, according to the newspaper report.
Yara’s bid for the nitrogen fertilizer assets was unanimously rejected in August by the Petrobras Board of Directors after talks between the two companies for more than a year over the sale of ANSA, according to a Bloomberg report, citing people familiar with the matter (GM Aug. 5, p. 36).
However, Yara was reported to have remained interested in the plant, with an Aug. 19 vote for a new Petrobras Board thought to have re-opened the door to approval.
Russian fertilizer group EuroChem Group AG and Brazil steel and iron ore producer Cia Siderugica Nacional SA (CSN) had also shown interest in the ANSA assets, according to the August Bloomberg report, citing people familiar with the matter.
In its Dec. 19 statement, Petrobras said it will now evaluate its next steps related to the divestment of ANSA.
ANSA has installed daily production capacity of 1,975 mt of urea and 1,303 mt of ammonia, but has been mothballed since early 2020 after a series of losses since being acquired in 2013.
Yara also has been linked as a potential buyer of Petrobras’ other nitrogen fertilizer unit, “Nitrogen Fertilizer Unit-III” (UFN-III), in Três Lagoas, in the state of Mato Grosso do Sul.
Petrobras in September was reported by Reuters to be on the verge of selling the assets to the Norwegian company, a report denied by Petrobras, according to Bloomberg, citing a statement by Petrobras that the information is “untrue” and that the sales process is still in the binding stage and has not reached the stage to receive proposals (GM Sept. 16, p. 30).
According to the Reuters report, Yara would pay less than $100 million for the facility and the deal would be announced within a few weeks.
UFN-III has been under construction since 2011, and at last report was 81% complete. Upon completion, the unit will have a projected urea and ammonia production capacity of 3,600 m/d and 2,200 m/d, respectively. The buyer is expected to complete the plant.
However, according to a banamericas report this week, citing a researcher at Brazilian petroleum research institute Ineep, Henrique Jäger, Petrobras is halting sales of key downstream assets – while moving forward with its upstream divestments – following the election victory of Luiz Inácio Lula da Silva as the country’s new president at the end of October. Da Silva will resume power on Jan. 1.
His transition team for the energy sector considers it of strategic importance that the state-owned Petrobras remains an integrated upstream-and-downstream company with a major presence in the refining, natural gas, and petrochemical sectors, while also investing in alternative energy sources,
Jäger, according to the report, believes Petrobras will resume investments in the fertilizer sector, likely putting ANSA back into operation with the reconversion to natural gas. Previously, the plant has been operated from asphaltic rock, whose market value has appreciated, making the operation expensive, which led to the plant’s mothballing, he said.
Jäger also thinks Petrobras will probably finish the construction of UFN-III, “if only to recover the investments already made and sell it later,” according to the report.
Petrobras has not commented on this week’s media reports, and Yara has said it does not comment on market rumours.