Brazil may extend the deadline for Venezuelan state oil firm Petroleos de Venezuela S.A. to provide loan guarantees and secure its participation in the bi-national Abreu e Lima heavy-oil refinery, the CEO of Brazilian state-controlled energy company Petrobras said.
Maria das Gracas Foster said PDVSA is in the "final" phase of securing a loan needed to pay for its 40 percent stake in the refinery, although the November deadline is approaching.
"If they don't present the guarantees in November, I'm going to discuss a new deadline because I want them (PDVSA) to be a part of this project," Foster said in a Senate hearing.
The two companies agreed in 2005 to jointly build the 230,000-barrel-per-day refinery in the northeastern Brazilian state of Pernambuco. According to the joint-venture terms, Petrobras is to have a 60 percent stake and PDVSA the remaining 40 percent.
Petrobras began building the refinery in 2007 with its own funds while waiting for PDVSA to assume its portion of a loan extended by Brazilian state development bank BNDES to finance the project.
BNDES has thus far denied the loan to PDVSA due to lack of sufficient collateral.
Petrobras has set different deadlines for its joint-venture partner to meet its component of the financing arrangement and the next one expires in November.
For PDVSA to participate in the project, it must acquire a 40 percent stake in Abreu e Lima, assume responsibility for that same proportion of the BNDES loan to fund the project and cover 40 percent of the costs Petrobras has already incurred in the construction phase.
Foster also denied reports by the controller general's office that the cost of the project has spiraled far above what was included in the initial budget.
Foster, who took the helm of Petrobras in February, said the higher price tag is due to mistakes made thus far, exchange-rate fluctuations and the fact the budget did not include the interest the companies must pay on the loan.
According to the U.S. Energy Information Administration, Petrobras plans to increase its Brazilian refining capacity to more than 3.1 million barrels per day by 2020 to meet rising domestic demand.
Abreu e Lima is one of five new refineries the company will build to achieve that objective, the EIA said in a report earlier this year. EFE