SAO PAULO, June 19 Petróleo Brasileiro SA,
Brazil's state-run oil company, and China Petroleum and Chemical
Corp are in talks to build a $20 billion, 300,000-barrels-a-day
refinery in the South American country, according to a
securities filing on Wednesday.
Petrobras said in the filing that the non-binding
accord with Sinopec, as China Petroleum is known,
allows both companies to study the feasibility of the project in
the northeastern state of Maranhão. The talks could lead to the
creation of a joint venture.
The refinery, known as Premium I, is one of four that
Petrobras hopes to open by 2017 in an effort to boost refinery
capacity 50 percent to 3 million barrels a day by 2020. The
project, initially budgeted at $20 billion, is expected to have
initial output of 300,000 barrels per day, doubling to 600,000
bpd in 2020.
Petrobras has been facing soaring costs and losses in its
refining division due to government controls on gasoline prices.
Also, it is trying to develop giant, new offshore oil resources,
which are sapping the bulk of its $237 billion five-year
Brazil's energy minister said in February the government was
seeking help from China, which recently became Brazil's top
trade partner, to finish building refineries as it tries to cut
reliance on imported fuels.
Despite running at record levels, Petrobras' 12 existing
refineries have been unable to keep up with demand for gasoline,
diesel, cooking gas and jet fuel. Gasoline consumption alone
rose more than 12 percent.
Last week Petrobras announced a similar accord with Korea's
GSS Holdings Corp to study a joint venture to build
a 300,000-bpd refinery, known as Premium II, near Fortaleza,
also in the northeast.
Petrobras preferred shares fell 1 percent to 17.65 reais in
Sao Paulo trading.