(Adds ANP response, licensing details, Petrobras refinery problems and fuel market outlook)
RIO DE JANEIRO, Nov 4 (Reuters) - Brazil’s state-run oil company Petroleo Brasileiro SA expects to receive a permit to start operations at its RNEST or “Abreu e Lima” refinery in the country’s northeast by mid-November, the firm said in a response to questions from Reuters.
Once that permit is issued, Petrobras, as the company is known, will be able to start commercial operations at the refinery, the statement said. The refinery is designed to process 230,000 barrels of crude oil a day but is not expected to reach that level until at least the second half of 2015.
Getting RNEST operating is essential for Petrobras, whose refining division has lost more than 59 billion reais ($24 billion) since the end of 2010, in large part because the government refused to let it raise domestic fuel prices in line with world prices. With its 13 domestic refineries unable to meet all Brazil’s rising needs, it must buy fuel abroad, selling every barrel of imported gasoline and diesel at home at a loss.
It also needs to stem losses at RNEST itself, which is four years behind schedule and the center of a growing corruption investigation involving the company’s former refining chief and leading political parties. Its nearly $20 billion cost is more than five times the original budget and makes it one of the most expensive refineries ever built.
Delays in bringing the refinery, which will produce mostly diesel from heavy crude, will also bolster demand for ultra-low-sulfur diesel in the Atlantic Basin fuels market.
Petrobras received an environmental license to operate the plant on Oct. 30 from the government of Pernambuco state where the refinery is located, the state said Monday.
The license limits output at the plant to 45,000 barrels a day of low-sulfur crude until Petrobras can show that pollution control equipment to deal with waste water and oxides of sulfur, nitrogen and carbon and other noxious fumes are working perfectly.
The ANP declined to say when its permit for Abreu e Lima will be granted in an emailed response to questions from Reuters. Under ANP rules, an inspection, formal report and final board approval are required before a refinery will be granted permission to operate after receiving an environmental license.
The first 115,000 barrel a day production “train” at Abreu e Lima is complete and expected to start operations first, Petrobras said. Petrobras has previously said the train would start up this week.
Petrobras said in a note Tuesday that it had already lit the fuel-oil burning boilers on the first train and that the vapor is being used to clean the pipes at the unit. Once the ANP approves operation, the system will be slowly charged up and fuel delivered to the market.
A fuel market source with direct knowledge of Petrobras fuel sales rules, prices and plans said there is little chance fuel will be offered to distributors in Brazil until at least January. (Reporting by Jeb Blount and Marta Nogueira; Editing by Chizu Nomiyama and Lisa Shumaker)