RIO DE JANEIRO, Dec 6 (Reuters) - Brazil’s state-run oil company Petroleo Brasileiro SA started producing fuel at its new refinery near Recife on Saturday, four years late, having suffered huge cost overruns and become the focus of a major corruption investigation.
The Abreu e Lima refinery, Brazil’s first crude-processing facility to open in more than 30 years, is expected to cost about $20 billion on completion, five times the original budget set out by Petrobras, as the company is known.
The refinery is also at the center of an investigation into an alleged scheme where contractors inflated prices and kicked much of the excess back to political parties. That scandal prevented Petrobras from releasing its third-quarter financial results this year.
The refinery, which will eventually operate two trains with the capacity to process 115,000 barrels per day (bpd) each, on Saturday started producing fuel from the first train.
Petrobras operation license allows it to refine up to 45,000 barrels per day (bpd) of crude. On its first day of operation, the train’s atmospheric distillation unit, where crude is broken into different products with heat, produced liquefied petroleum gas, naphtha, diesel fuel and atmospheric residue that will be used to make petrochemical coke.
A second 115,000 barrel a day train is scheduled to start operations in the second half of 2015.
At a cost of $87,000 for each barrel of refining capacity added, the refinery may be the most expensive ever built.
Originally, 40 percent of the budget was to have been provided by Petroleos de Venezuela SA, but the Venezuelan state oil company could not secure financing and never signed the contract.
Petrobras is counting on the refinery to reduce its need to import diesel. The company has been selling imports at a loss as Brazil’s government has not let it adjust prices in line with world levels and its refineries have not kept up with demand.
This resulted in much of the refining division’s 60 billion reais ($23 billion) of losses since 2010.
Petrobras is the world’s most indebted and least profitable major oil company, according to Thomson Reuters data.
$1 = 2.5892 Brazilian reais Reporting by Jeb Blount; Editing by Raissa Kasolowsky