Colombia seeks partnerships with Brazil’s Petrobras

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Colombia has interest in attracting partnerships and
investment from Brazilian state-controlled oil company Petroleo Brasileiro S.A.,
or Petrobras, for refinery and other energy-development projects,
Colombian President Alvaro Uribe said Tuesday.

“If a company like Petrobras comes to Colombia, it will be welcomed,” Uribe
said in a press conference following a meeting with Brazilian President Luiz
Inacio Lula da Silva.

In particular, Uribe suggested Petrobras could take part in a refinery
improvement project with Colombian state oil company Ecopetrol.

Bidding on the project, which was aimed at raising output at Colombia’s
second-largest refinery to 140,000 barrels a day from 80,000 b/d, was originally
won by the Swiss firm Glencore International AG. However, Glencore on Monday
indicated it would back out of the project after failing to raise the necessary
financing.

Uribe met with Lula on Tuesday to discuss investment and trade-cooperation
initiatives to face the current global economic slowdown.

Colombia’s Mines and Energy Minister Hernan Martinez on Monday had said
Glencore will sell back its 51% stake in Colombia’s second-largest oil refinery
to Ecopetrol after it was unable to secure the financing needed to carry out a $
4 billion upgrade.

The Colombian government, Ecopetrol and Glencore are negotiating the amount
Glencore will receive in return for the stake in the refinery located in the
Caribbean port of Cartagena.

Martinez said Ecopetrol might seek a new partner to replace Glencore.

Glencore acquired the 51% stake in the refinery in 2006 with a $656 million
offer, beating a rival offer from Petrobras.

Later that same year, Petrobras’ officials said the company was planning to
team up with Glencore in the project.

In addition to Petrobras’ previous interest in the Colombian refinery, the
company also toyed with the idea of purchasing a refinery in Aruba from Valero
Energy Corp. (VLO) before ending talks last year. Petrobras is completing the
purchase of the 50% stake it doesn’t own in a Pasadena, Texas, refinery that it
operates. That stake is currently held by Transcor Astra Group SA.

Petrobras’ near-term plans, however, will likely be focused on developing its
refining and production assets at home in Brazil. The company recently announced
a $174.4 billion strategic plan for 2009-2013, including $47.8 billion in its
downstream operations. The company plans to build six refineries, maximizing its
return from increased crude output by producing higher-value derivatives such as
gasoline, diesel and petrochemicals for sale at home and abroad.

The state-run oil company wants to boost refining output to 2.27 million
barrels a day by 2013, up from current production of 1.8 million barrels a day.