UPDATE 1-Brazil's Manguinhos refinery wins order blocking share trading

Thu Oct 18, 2012 12:31pm EDT

* Refinery expropriation order led to trading halt
    * Common, preferred shares last traded October 11
    * Refinery forced to end Sinopec tank talks -report

 (Adds detail of expropriation plans, talks with Sinopec,
refinery details, updates prices)
    RIO DE JANEIRO, Oct 18 (Reuters) - Brazil's Refinaria de
Petroleos de Manguinhos SA said on Thursday that it
won an injunction preventing the restart of trading in its
stock, halted after the government of Rio de Janeiro ordered the
expropriation of its refinery this week.
    The company sought the injunction because "it still does not
have the ability to give the market criteria that would help
investors make a rational decision with respect to sale or
purchase" of the company's stock, the company said in a
securities filing. 
    The company's common stock last traded on Thurs., Oct. 11
when it closed at 84 centavos on the Sao Paulo stock exchange.
The company's preferred shares closed at 66 centavos
the same day.
    At those prices the company's market value is 755 million
reais ($372 million).
    Mangunihos' problems began Sunday when Rio de Janeiro-state
governor Sergio Cabral announced his plan to close the refinery
as part of a shantytown redevelopment project. The order was
officially issued on Tuesday.
    Since then, Manguinhos ended talks with China's No. 2 oil
company Sinopec, the O Globo daily newspaper
reported on Thursday. Sinopec was interested in taking part in a
$690 million plan to expand the refinery's tank storage
facilities, the paper said.
    Sinopec, which bought 40 percent of the Brazilian
exploration and production operations of Spain's Repsol SA
 in 2010 for $7.1 billion, has small but growing
Brazilian production, according to Brazil's petroleum regulator,
the ANP. 
    The Chinese company sought to use the refinery and its
tanker loading facilities to store oil, Globo said. The governor
wants to turn Manguinhos, near Rio de Janeiro's downtown center
and port, into a public housing project.
    Cleaning up oil and heavy metals in the ground at the
refinery site is expected to cost as much as $100 million,
according to a report in the Valor Economico newspaper on
Thursday. The state does not expect to have to pay much to
refinery shareholders because the company has a large tax debt
with the government, the governor said on Sunday.
    No price has yet been announced, though minority investors
are considering suing the government over the expropriation,
Valor reported.
    The 57-year-old refinery, Brazil's smallest, has the
capacity to refine 15,000 barrels of crude oil a day. It is the
only refinery in Brazil, the world's sixth-largest economy, that
is not owned by state-led oil company Petrobras.
Petrobras produced an average 2 million barrels a day of refined
products in the second quarter.
    Because Petrobras does not raise domestic fuel prices in
line with world prices, Manguinhos, which does not have oil
production assets and must pay international prices for its
crude, has found it hard to compete with Petrobras in the local
fuels market.
    Manguinhos has refined about 3.5 million barrels of oil in
the last 12 months, Manguinhos said on Monday. That's less than
two days of Brazilian oil output. Manguinhos' refining activity
has been limited for nearly a decade because of Petrobras' fuel
price policies.
    In addition to refining, the company is also involved in
distribution and owns port facilities.    
    ($1 = 2.03 Brazilian reais)

 (Reporting by Jeb Blount; Editing by Gerald E. McCormick and
Sofina Mirza-Reid)
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