Petrobras Gets Refinery Permit; Fuel Unlikely to Flow Until 2015

Brazil's state-run oil company, Petroleo Brasileiro SA, received a license to start operating its long-delayed and over-budget RNEST, or "Abreu e Lima," refinery in the northeast of the country, a spokeswoman for the Pernambuco-state environmental agency told Reuters on Monday.

The 230,000 barrel-a-day refinery, though, is unlikely to deliver fuel to the Brazilian market until early 2015, according to a fuel-market source with direct knowledge of fuel-distribution plans at Petrobras, as the oil company is known.

Further delays at the nearly $20 billion heavy-crude refinery will slow Petrobras' planned reduction of money-losing diesel imports, helping bolster demand in the Atlantic Basin fuels market.

Brazil's government has not allowed Petrobras to raise domestic fuel prices in line with international prices, forcing the company to sell imports at home at a loss.

Losses on imports of diesel and gasoline have crimped cash needed for the company's $231 billion, five-year expansion plan, helping make Petrobras the world's most-indebted and least-profitable major oil company.

Petrobras officials did not respond to requests for comment.

RNEST was supposed to start its first 115,000 barrel-a-day refining unit this week. Union officials representing workers at the plant said that delays in the license, which was originally expected months ago, mean that the refinery is unlikely to start operations until some time in December.

The complex logistics of delivering crude to the plant by ship and then shipping the fuels produced to distributors on Brazil's northeast coast means it will be some time before the fuel reaches consumers, the fuel-market source said.

Under Petrobras' unified order system, distributors must place their fuel requests for December by Wednesday, the source said. As Petrobras has yet to inform those distributors of any potential fuel coming from RNEST, sales from RNEST are unlikely until January at the earliest, the source added.

RNEST is expected to start its second 115,000 barrel a day refining train sometime in mid-2015, according to Petrobras 2014-2018 strategic plan. The refinery was originally supposed to be operating fully in 2011.

Union officials told Reuters they also expect the opening of the second train to be delayed, perhaps until the end of 2015.

"There have been a series of management failures at the refinery and the license is the latest of many delays," said Marcos Aurelio Monteiro da Silva, coordinator of Sindipetro-PE/PB which represents Petrobras oil workers in Brazil's Pernambuco and Paraiba states.

(Reporting by Jeb Blount and Marta Nogueira; Editing by Diane Craft and Alan Crosby)