Petrobras, PDVSA Sign 15 Energy MOUs

Brazil's federal energy company Petrobras (NYSE: PBR) and Venezuela's state oil company PDVSA have signed 15 memorandums of understanding (MOUs) to develop joint exploration and production, refining, petrochemicals and transport projects in Brazil, Venezuela and elsewhere, the companies announced during a business summit in Caracas on Monday.

The MOUs include the construction of a US$2bn refinery in northeastern Brazil, joint natural gas exploration in Venezuela, oil production on mature fields, a crude upgrader project in the Orinoco belt, technological exchange in ethanol and biofuel production, crude transport, feasibility studies for a fertilizer plant, ship and port building, and the construction of a US$20mn lubricants plant in Cuba, Venezuela's communications ministry said in a statement.

The mines and energy ministries of both countries have formed a commission to study joint business opportunities.

The refinery will be in the northeastern state of Pernambuco at the port of Suape, the Pernambuco state government said in a statement Monday. Pernambuco state authorities and local investment group Renor have contacted PDVSA and Petrobras about the project and the state government has offered tax breaks, the statement said.

PDVSA and Petrobras have agreed to conclude economic feasibility studies for the refinery expected to have processing capacity of 150,000-200,000 barrels of oil a day.

Renor's CEO Gilberto Prado is in Caracas and officials at the company's headquarters in Rio de Janeiro would not comment on the MOUs. Brazil has been speeding up the construction of new refineries to meet growing demand for fuel and process the locally produced heavy crude, thus reducing the country's dependence on imports of lighter crude.

Petrobras controls over 95% of the refineries in the country and owns 11 refineries with the capacity to process of 1.97 million b/d. It also owns two refineries in Argentina and two in Bolivia with combined capacity of 128,000b/d.

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