May 24, 2018 / 7:55 PM / 4 months ago

Petrobras pricing pressure spooks potential refinery buyers- sources

SAO PAULO, May 24 (Reuters) - A surprise decision by Brazil’s state-controlled oil company Petroleo Brasileiro SA to cut diesel prices in response to truckers’ protests is worrying some potential buyers of Petrobras’ refineries, three people with knowledge of the matter said on Thursday.

Petrobras’ planned sale of a 60 percent stake in four refineries, announced on April 19, is part of a wider effort to unload assets to reduce debt. The refineries will be sold in two regional blocks: one in the northeast and another in the southern region of the country, with two refineries each.

Petrobras has said it will retain around 75 percent of its domestic refining capacity after the privatization of the four units.

Petrobras is hoping to get non-binding proposals in early July, two people with knowledge of the sale process said, asking for anonymity because negotiations are private.

Among the groups Petrobras has invited to bid are buyout firms Patria Investimentos Ltda, which has an investment agreement with Blackstone Group LP, and First Reserve Management LP. Other potential buyers are Brazilian firms Ultrapar Participações SA and Cosan SA Industria e Comercio , the sources said.

The groups are expected to receive the initial invitations to participate in the process next Monday.

But rising pressure on Petrobras to cut fuel prices, sparked by the truckers’ protest this week, has worried some potential acquirers.

Petrobras late on Wednesday said it would slash diesel prices by 10 percent for 15 days to ease pressure while the government tries to reach a permanent deal with truckers to ease price pressure more permanently. The decision triggered a 15 percent plunge in Petrobras shares on Thursday.

Two potential investors told Reuters they worry that changes in Petrobras’ pricing policy would strongly affect private competitors, as the state-controlled company plans to keep most of its refining capacity, especially in southeastern Brazil, the country’s wealthiest region.

Potential pricing changes to appease the government could create unfair competition, the sources added.

Cosan, Pátria, First Reserve did not immediately respond to requests for comment on the matter. Ultrapar declined to comment.

In a conference call with investors on Thursday, Petrobras Chief Executive Officer Pedro Parente, who has insisted that the diesel price cut does not change the company’s overall pricing policy, also said it would not jeopardize the refinery sale plan.

But the sources said investors were likely to demand more guarantees related to pricing policies in the refineries sale process as a result. (Additional reporting by Alexandra Alper in Rio de Janeiro; Editing by Tom Brown)

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