Petrobras, fuels prices and competition in downstream markets

Brazil’s downstream oil market is, at long last, headed for a fully competitive environment. This is the result of an agreement entered between Petrobras and antitrust authority CADE under which the state-owned oil company is to sell control over refineries representing half of its refining capacity. However, as the Bolsonaro administration has replaced the CEO of Petrobras amidst discomfort over the company’s pricing policies, doubts have now emerged as to whether the divestment plan will proceed.

This edition of LS Brazil Outlook discusses key aspects relating to this debate and the uncertainties surrounding the immediate future of Petrobras and the Brazilian downstream oil industry. Bolívar Moura Rocha sheds light on the background for Petrobras’s decision to sell some of its refineries and discusses potential implications for pricing policy. Guest author Winston Fritsch, of Struttura Project Development and Finance, discusses the dynamics that is likely to emerge from the arrival of new players in downstream markets. Isabella Tanuy Gonçalves discusses the 2019 agreement with antitrust authority CADE and sheds light on the implications of a potential reversal of Petrobras’s commitment to divest its refineries. Finally, Renata Arcoverde comments on the stage of the divestment program and speculates on potential next steps, as resistance to the sale mounts in some quarters.

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