Petrobras Discusses Repurchasing Brazil Refinery from Mubadala

• Mataripe refinery currently operates at only 60% capacity while Petrobras' other plants run at maximum capacity to boost local production
• The repurchase gains urgency after U.S.-Israel conflict with Iran caused diesel prices to surge, impacting Brazilian consumers as the country imports about 25% of its diesel needs
• Rising fuel prices have become a major political concern for President Lula ahead of October's election where he seeks a fourth non-consecutive term

SUMMARY

Brazilian state oil company Petrobras is in early-stage negotiations with Abu Dhabi's Mubadala sovereign wealth fund to repurchase the Mataripe refinery, according to sources familiar with the matter. A deal could potentially be finalized by year-end.

Key Details:

• Mataripe is Brazil's second-largest refinery, currently operating at approximately 60% capacity
• The refinery was sold during former President Jair Bolsonaro's administration
• Current President Luiz Inacio Lula da Silva announced last month his intention to have Petrobras reacquire the facility
• Petrobras' existing refineries are operating at maximum capacity to boost domestic production

Market Context:

The repurchase discussions come amid elevated global diesel prices triggered by the U.S.-Israel conflict with Iran. Brazil imports roughly 25% of its total diesel requirements, making it vulnerable to international price fluctuations. The surge in fuel costs has created significant pressure on consumers and represents a political challenge for President Lula ahead of the October presidential election, where he is seeking a fourth non-consecutive term.

Strategic Rationale:

Petrobras aims to increase domestic refining capacity to reduce dependence on foreign diesel imports and mitigate exposure to volatile global energy markets. Bringing Mataripe back into the state-controlled portfolio would provide additional production capability at a time when existing facilities are operating at full capacity.

Neither Petrobras nor Mubadala provided official comments on the negotiations. The deal remains in preliminary stages with no confirmed terms or valuation disclosed.