Unigel, a leading chemical company in the production of nitrogen fertilizers in Brazil, is interested in purchasing a Petrobras project in Mato Grosso do Sul designed to produce urea and ammonia, with a view to expanding its operations in the sector, the company’s CEO told Reuters.
Interest has increased after the announcement this week of the failed negotiation between Petrobras and Russia’s Acron for the sale of the venture, which still needs to be completed to start operating.
The operation of the unit, which had a capacity designed by Petrobras at 3,600 tons/day of urea and 2,200 tons/day of ammonia, could help Brazil to reduce its dependence on imported products, while the country deals with difficulties arising from the war between Ukraine and Russia.
Petrobras has been trying for years to sell the Nitrogen Fertilizer Unit III (UFN-III), located in Três Lagoas (MS), whose construction was halted in 2014, with about 80% of the works completed. And, recently, it had signed a draft contract with Acron.
The unit in Mato Grosso do Sul would fit into the strategy of Unigel, which already operates two nitrogen fertilizer plants leased from Petrobras, in Bahia and Sergipe.
“There is this perspective (of entering into negotiations with Petrobras). But it will depend on the direction that Petrobras will take, depending on the public notice, and we will look carefully,” said Unigel’s Executive President Roberto Noronha Santos.
“Brazil is a major importer of urea, buying around 8 million tons, Unigel already produces 1 million tons/year, and Três Lagoas will produce 1.2 million tons/year,” said the executive.
He said that, if Unigel wins in an eventual bid, he would like to “resume the work in the shortest possible time”.
According to the executive, a chemical project normally takes three to four years, “but as more than 80% of the work is already completed, the deadline can be shortened: it would take about 18 months to put the plant into operation”.
The estimated cost for the completion of the unit, in which Petrobras invested around 3 billion reais, would be “hundreds of millions of dollars”.
He recalled that Unigel invested 530 million reais in the units in Sergipe and Bahia.
Once in operation, UFN-III would guarantee more national supply of fertilizer raw material to farmers in Brazil, the fourth largest consumer of nitrogen fertilizers, which has imported about 75% of its demand for this type of product — with Russia is among the main suppliers.
Unigel would be a better option than Acron, according to two sources with knowledge of the Brazilian chemical company’s interest, who spoke on condition of anonymity.
Petrobras said on Thursday that negotiations with Acron for the sale of the nitrogenous unit had failed.
According to the state-owned company, the business plan proposed by Acron made it impossible to obtain the necessary government approvals for the continuity of the transaction.
The negotiations were terminated because they could take a long time and the results would be uncertain, “with the risk of Acron not completing UFN-III, using the space only as a warehouse and a mixture of nitrogen,” said one of the sources.
Unigel, on the other hand, with the lease of the two Petrobras units, reached a leading position in the production of nitrogen fertilizers in the country, and would be better able to complete the project, added the source.
“The company already invests in fertilizers in Brazil, and is interested in concluding the UFN-III and occupying 50% of the fertilizer market,” said one of the sources.
Unigel has more than 2.9 million tons of installed capacity, with 925 thousand tons of ammonia, 1.125 million tons of urea and 670 thousand tons of ammonium sulfate, according to company information.