Petrobras says PDVSA asks too much for its oil

SAO PAULO, Jan 22, 2009

Venezuela state oil company PDVSA is asking too much for the heavy oil that Brazil’s state-run oil company Petrobras hopes to use to supply its Abreu Lima refinery, a Petrobras official said on Wednesday.

Paulo Roberto Costa, director of supply at Petrobras, said PDVSA has been reluctant to sign a supply agreement by which it would receive prices linked to some international reference price for its heavy crude.

“We want a market price in the contract. The reference can be Brent or WTI (West Texas Intermediate). But they want more (than a market price),” Roberto Costa told reporters.

The Abreu Lima refinery, now under construction in northeastern Brazil, is a joint venture, with Petrobras holding a 60 percent stake and PDVSA a 40 percent share, although Roberto Costa said PDVSA has not made any investment in the venture.

“We closed the ownership deal, but we have not closed the petroleum supply contract … PDVSA has made no investment in the refinery to present. All the capital is Petrobras’s. We are going it alone,” he said.

Roberto Costa said Petrobras had hoped to have reached a crude supply agreement in 2008, but added that Petrobras would move ahead with the refinery with or without PDVSA. Brazil produces ample heavy weight crude to supply the refinery.

“The project will not stop. The plan is to close a deal with PDVSA … if it is delayed, we will not delay the project,” Roberto Costa said. “We have sufficient heavy oil to supply the project.”

He added that bids in recent tenders held by Petrobras to build parts of the refinery had come in above expectations and some tenders would be canceled. Petrobras did something similar recently with tenders for the construction of the P-61 and P-63 production platforms.

“We will cancel more than one package of the Abreu Lima refinery tenders for excessive prices. We will call the companies, see what happened and ask for a significant reduction,” he said.

Story reporting by Rodrigo Viga Gaier; writing by Reese Ewing; editing by Walter Bagley from Reuters

Reuters 01/21/2009

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