By Rodrigo Viga Gaier and Marta Nogueira
RIO DE JANEIRO (Reuters) - The board of Brazilian state-run oil company Petrobras on Thursday approved plans to select a partner to restart operations at its fertilizer plants in northeastern Brazil, according to four sources familiar with the matter.
But the move still hinges on resolving ongoing disputes with current leaseholder Unigel, added the sources, who requested anonymity as the decision has not yet been made public.
Chemical company Unigel was demanding compensation from Petrobras for losses on the plants, as previously reported by Reuters, with the impasse marking a setback for President Luiz Inacio Lula da Silva’s plans to reduce Brazil’s dependency on imported fertilizer.
As an agricultural powerhouse, Brazil is among the world’s top consumers of fertilizers, more than 80% of which it imports.
Petrobras leased the two nitrogen fertilizer plants, located in the states of Bahia and Sergipe, to Unigel in 2019 under a 10-year agreement.
However, both facilities have been shut down since 2023, with Unigel citing unfeasible operating conditions due to high natural gas prices in Brazil.
Unigel has yet to respond to Petrobras following the board decision, the sources said.
Petrobras declined to comment when contacted by Reuters. Unigel did not immediately respond to a request for comment.
The two companies are currently engaged in arbitration proceedings related to the lease contract, including disagreements over the shutdown of operations, Unigel’s investments, and gas supply terms.
A formal tender can move forward only if a negotiated settlement is reached, the sources said.
"We approved the tender process, but for it to happen, the arbitration must be resolved. Without that, we can’t move ahead," one company source emphasized.
A second source said that if the disputes are fully resolved, Unigel itself could take part in the upcoming bidding process to resume operations at the plants.