New Petrobras strategy signals reboot for Brazil fertilizer plans

SAO PAULO (Reuters) - New strategic planning at Brazil’s state-run oil firm Petrobras likely spells a reboot for a national fertilizer production plan drawn up last year, according to people familiar with the industry.

FILE PHOTO: A man walks past the headquarters of Brazilian oil company Petrobras in Rio de Janeiro, Brazil, September 10, 2020. REUTERS/Ricardo Moraes/File Photo

Petroleo Brasileiro SA, as the state firm is formally known, said on Tuesday that it was calling off talks to sell a nitrogen fertilizer unit nearly bought by Russia’s Acron.

Last month, Petrobras also terminated the sale to Norway’s Yara International ASA of an idle nitrogen fertilizer plant in Parana.

A government official, who requested anonymity to discuss internal deliberations, said the expectation that Petrobras will resume major nitrogen fertilizer projects promises to be a game changer if confirmed in the company’s new strategic plan.

Petrobras declined to comment.

“Whether Brazil can reach its nitrogen fertilizer goals faster with Petrobras’ participation is an open question,” the official said. “(But) this could change everything.”

An interministerial council known as Confert is responsible for Brazil’s national fertilizer plan, drafted in March 2022 to reduce dependence on imports amid fears of global shortages due to the war in Ukraine.

However, Confert is due for a reshuffle reflecting the new ministerial structure under President Luiz Inacio Lula da Silva and it has not yet been convened to discuss the new outlook for Petrobras.

“We will have to adjust all the variables based on the old Petrobras strategic model with (the company’s) new model,” the official said.

Marcelo Mello, head of the StoneX fertilizer desk in Sao Paulo, said it will be challenging for Petrobras to resume fertilizer projects after it spent years cutting back to focus on its offshore oil fields.

However, he said just one of the plants that Petrobras failed to sell in center-west Brazil could boost domestic supply of nitrogen fertilizers by 1.2 million tonnes per year.

That would be almost double Brazil’s output in the first nine months of 2022, according to data from industry lobby Anda.

Reporting by Ana Mano; Editing by Brad Haynes and Jonathan Oatis