By Jay Forte, Contributing Reporter
RIO DE JANEIRO, BRAZIL – The governor of Rio de Janeiro, Luiz Fernando “Pezão” (Bigfoot), said yesterday (June 30th) that the troubled refinery, Petrochemical Complex of the State of Rio de Janeiro (Comperj), will be completed. In April O Globo reported Brazil’s state-run oil company Petrobras will lose at least US$14.3 billion with the Comperj refinery, nearly twelve times more than the plant is expected to earn from operations over its lifetime.
Governor Pezão added that Petrobras is expected to announce in the coming days the search for partners to complete the project. “It’s a project that may suffer a momentary standstill, but will resume. We have 86 percent of the work completed and missing fourteen percent [of the first phase of works]. I’m sure we will finish,” said the governor.
The governor of the Espírito Santo, Paul Hartung, defended the questioning on mandatory participation of Petrobras in oil production in the country. “We need to ask ourselves if that Petrobras obligation of thirty percent is consistent with the reality that we are living now.”
Hartung also highlighted the need to improve the local content obligations to facilitate bids. “We need to revisit local participation, but not in order to disqualify it.” Petrobras officially requested that regulators relax strict requirements on “local content” laws in March 2013, the term refers to the use of domestic goods and services.
At the time, Brazil had some of the most demanding local content laws in the world. Awarded contracts require that activities in the exploration phase use between 37 and 85 percent local goods and services, while those in the development phase will have to use between 55 and 80 percent.
After stating that the reduction of Petrobras’ investments will reach their state and across the country, Hartung suggested discussions on measures to live with the new scenario. “At a time like this, we must seek ways and means to attract other business groups that can stimulate the sector,” he concluded.
O Globo also reported that the Petrobras study of Comperj submitted to the TCU determined that Petrobras would lose US$17 billion if it abandoned the unfinished refinery. Initially planned as petrochemical refinery, Reuters reported that work is years behind schedule and its will now focus on the production of gasoline, diesel and other fuels.