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Petrobras (PBR) Plans to Finish RNEST Refinery Expansion by 2025
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Petrobras (PBR - Free Report) , a Brazilian state-run oil firm, has unveiled its plan to complete the expansion of Train 1 at its Abreu e Lima (RNEST) refinery by early 2025. This strategic move came almost a decade after the initial expansion was abruptly halted due to a colossal corruption scandal. As the energy giant navigates through challenges, this development marks a significant step toward enhancing fuel production and reducing the nation's reliance on imports.
RNEST Refinery Expansion Timeline
Background and Corruption Halting: The RNEST refinery, situated in Pernambuco, witnessed a pause in its expansion endeavors in 2015 during the "Car Wash" corruption probe. Initiated in 2014, the probe scrutinized contracts at Petrobras, eventually leading to the incarceration of the former president Luiz Inacio Lula da Silva in 2018.
Resumption and Ambitious Goals: Despite the setbacks, Petrobras is set to resume expansion work on the second train of the refinery in the latter half of this year, with an anticipated completion in 2028. Marina Cavassin, executive manager of production development projects at Petrobras, emphasized the complexity of the system, indicating partial deliveries as a part of the process.
Impact on RNEST's Capacity: The completion of the first train is expected to elevate RNEST's refining capacity by 15,000 barrels per day, reaching a total of 115,000 bpd. After the completion of the second train, RNEST's capacity is set to soar to an impressive 260,000 bpd, solidifying its role as a crucial component in Petrobras' refining landscape.
Strategic Investment and National Dependency
Petrobras' president Jean Paul Prates underscores the expansion at RNEST as a vital component of the company's broader strategy. The investment aligns with a concerted effort to boost fuel production, thereby reducing Brazil's dependency on fuel imports. This move not only bolsters the nation's energy independence but also contributes to its economic resilience.
Presidential Visit and Shift in Strategy
Luiz Inacio Lula da Silva's impending visit to the refinery, alongside Prates, signifies a renewed focus on domestic investments and job creation. Last year, as Lula assumed the presidency, Petrobras shifted from its divestment strategy, renegotiating deals and recalibrating its path toward growth.
Shifting Strategies and Future Outlook
Transition from Divestment: Petrobras' shift from its divestment strategy marks a significant departure from its previous approach. Last year, under the new leadership, the company renegotiated terms with antitrust watchdog CADE, leading to the retention of eight refineries, equivalent to approximately 50% of its capacity. This strategic move aligns with the overarching goal of strengthening Petrobras' position in the energy market.
Business Plan for 2024-2028: In November, Prates unveiled a robust business plan, allocating $102 billion in investments for the 2024-2028 period. This plan strategically incorporates the RNEST expansion, emphasizing Petrobras' commitment to sustainable growth. The comprehensive approach outlined in the business plan is set to redefine PBR’s role in the global energy landscape.
Conclusion
Petrobras' resurgence in the RNEST expansion project signifies a strategic move, emphasizing national energy security and sustainable growth. The completion of Train One and the subsequent development of Train Two showcase Petrobras' resilience and commitment to overcoming challenges. As the energy sector evolves, PBR stands poised to contribute significantly to Brazil's fuel production and reduce the country’s reliance on imports.
Headquartered in Dallas, TX, Sunoco is valued at $6.25 billion. The company currently pays a dividend of $3.37 per share, or 5.42%, on an annual basis.
Sunoco, along with its subsidiaries, distributes and retails motor fuels in the United States. It operates under two segments — Fuel Distribution and Marketing and All Other.
Oceaneering International is worth $1.95 billion. In the past year, its shares have fallen 3%.
The company provides engineered services and products, and robotic solutions to the offshore energy, defense, aerospace, manufacturing and entertainment industries worldwide.
Enbridge is valued at $77.88 billion. The company currently pays a dividend of $2.60 per share, or 7.09%, on an annual basis.
Enbridge and its subsidiaries are an energy infrastructure company with five segments — Liquids Pipelines, Gas Transmission and Midstream, Gas Distribution and Storage, Renewable Power Generation and Energy Services.
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Petrobras (PBR) Plans to Finish RNEST Refinery Expansion by 2025
Petrobras (PBR - Free Report) , a Brazilian state-run oil firm, has unveiled its plan to complete the expansion of Train 1 at its Abreu e Lima (RNEST) refinery by early 2025. This strategic move came almost a decade after the initial expansion was abruptly halted due to a colossal corruption scandal. As the energy giant navigates through challenges, this development marks a significant step toward enhancing fuel production and reducing the nation's reliance on imports.
RNEST Refinery Expansion Timeline
Background and Corruption Halting: The RNEST refinery, situated in Pernambuco, witnessed a pause in its expansion endeavors in 2015 during the "Car Wash" corruption probe. Initiated in 2014, the probe scrutinized contracts at Petrobras, eventually leading to the incarceration of the former president Luiz Inacio Lula da Silva in 2018.
Resumption and Ambitious Goals: Despite the setbacks, Petrobras is set to resume expansion work on the second train of the refinery in the latter half of this year, with an anticipated completion in 2028. Marina Cavassin, executive manager of production development projects at Petrobras, emphasized the complexity of the system, indicating partial deliveries as a part of the process.
Impact on RNEST's Capacity: The completion of the first train is expected to elevate RNEST's refining capacity by 15,000 barrels per day, reaching a total of 115,000 bpd. After the completion of the second train, RNEST's capacity is set to soar to an impressive 260,000 bpd, solidifying its role as a crucial component in Petrobras' refining landscape.
Strategic Investment and National Dependency
Petrobras' president Jean Paul Prates underscores the expansion at RNEST as a vital component of the company's broader strategy. The investment aligns with a concerted effort to boost fuel production, thereby reducing Brazil's dependency on fuel imports. This move not only bolsters the nation's energy independence but also contributes to its economic resilience.
Presidential Visit and Shift in Strategy
Luiz Inacio Lula da Silva's impending visit to the refinery, alongside Prates, signifies a renewed focus on domestic investments and job creation. Last year, as Lula assumed the presidency, Petrobras shifted from its divestment strategy, renegotiating deals and recalibrating its path toward growth.
Shifting Strategies and Future Outlook
Transition from Divestment: Petrobras' shift from its divestment strategy marks a significant departure from its previous approach. Last year, under the new leadership, the company renegotiated terms with antitrust watchdog CADE, leading to the retention of eight refineries, equivalent to approximately 50% of its capacity. This strategic move aligns with the overarching goal of strengthening Petrobras' position in the energy market.
Business Plan for 2024-2028: In November, Prates unveiled a robust business plan, allocating $102 billion in investments for the 2024-2028 period. This plan strategically incorporates the RNEST expansion, emphasizing Petrobras' commitment to sustainable growth. The comprehensive approach outlined in the business plan is set to redefine PBR’s role in the global energy landscape.
Conclusion
Petrobras' resurgence in the RNEST expansion project signifies a strategic move, emphasizing national energy security and sustainable growth. The completion of Train One and the subsequent development of Train Two showcase Petrobras' resilience and commitment to overcoming challenges. As the energy sector evolves, PBR stands poised to contribute significantly to Brazil's fuel production and reduce the country’s reliance on imports.
Zacks Rank and Key Picks
Currently, PBR carries a Zacks Rank #3 (Hold).
Investors interested in the energy sector might look at some better-ranked stocks like Sunoco LP (SUN - Free Report) Oceaneering International, Inc. (OII - Free Report) and Enbridge Inc. (ENB - Free Report) , both sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Headquartered in Dallas, TX, Sunoco is valued at $6.25 billion. The company currently pays a dividend of $3.37 per share, or 5.42%, on an annual basis.
Sunoco, along with its subsidiaries, distributes and retails motor fuels in the United States. It operates under two segments — Fuel Distribution and Marketing and All Other.
Oceaneering International is worth $1.95 billion. In the past year, its shares have fallen 3%.
The company provides engineered services and products, and robotic solutions to the offshore energy, defense, aerospace, manufacturing and entertainment industries worldwide.
Enbridge is valued at $77.88 billion. The company currently pays a dividend of $2.60 per share, or 7.09%, on an annual basis.
Enbridge and its subsidiaries are an energy infrastructure company with five segments — Liquids Pipelines, Gas Transmission and Midstream, Gas Distribution and Storage, Renewable Power Generation and Energy Services.