On account of the elections at the end of the year, Brazilian President Dilma Rousseff decided now to explain publicly why they voted to purchase the Pasadena refinery in 2006 by Petrobras, in an attempt to anticipate the debate to avoid electoral losses in October. The President evaluated that it would be best to address the debate now, than in the second half of the year, with the campaign already advanced. The purchase of the refinery was done with the approval of the entire Board of Petrobras, which at the time was headed by Dilma.
But the amount paid by Petrobras for the first 50% of the Pasadena refinery in the United States, may have been greater than what has been disclosed by the company. Document submitted to the State Securities Exchanges Commission (SEC), the regulatory agency of the U.S. financial market shows that the company paid US$ 416 million instead of US$ 360 million.
The report would have been sent to the SEC in 2007, a year after the purchase. Petrobras maintains that the Belgian company Astra paid US$ 42 million for Pasadena and invested another US$ 84 million. Petrobras then would have bought half the refinery for US$ 190 million, and invested another US$ 170 million.
But the companies didn’t agree on a few things and Astra executed a clause in the contract which demanded that Petrobras should buy the other half of the business. The state initially refused to comply with the clause, but after a long legal battle in a federal court in Texas, had to accept the deal in 2012, paying over US$ 820 million.
The president of Petrobras, Maria das Graças Foster, gave up trying to sell the refinery. Instead, she intends to make a number of improvements to try a better price in the future and reduce some losses with the operation. The refinery is one of the “cursed inheritances” inherited by the executive when she took office in February of last year.
Try to understand the business
– In January 2005, the Belgian Astra Oil bought the American Pasadena refinery for only US$ 42.5 million.
– The following year Petrobras acquired 50% stake in unit for US$ 360 million. Which means they bought half of the business for much more than it was worth it in its entirety!
– To top it off, Pasadena is a relatively small refinery with capacity to process only 150,000 barrels of oil daily. The plan was to take the Petrobras oil produced in Brazil to be refined to become fuel to be sold in the US.
The adaptation of the refinery would require US$ 1.5 billion.
The American newspaper The Wall Street Journal discusses the statement released by President Dilma Rousseff about buying the Pasadena refinery by Petrobras and claims that the scandal may be reflected in the re-election campaign. The Bloomberg agency notes that the Brazilian President “faces congressional investigation into the Petrobras deal”, referring to the proposal of CPI on the case. The attack also highlights opposition to “a mistake that cost more than $ 1 billion.” Nasdaq.com notes that the Brazilian president assigned to a “flawed” report the purchase of the refinery in Texas and considers the case “a big headache” for the Brazilian government.
Here, then President of Petrobrás tries to explain what happened.