(Bloomberg) -- Brazil’s state-controlled oil giant Petroleo Brasileiro SA is accelerating a plan to re-enter the fertilizer industry as the country’s agricultural sector booms, according to people familiar with the matter.
Petrobras’s fertilizer initiatives include developing innovative technologies and assessing an estimated $800 million investment to complete works at a plant known as UFN-III, said the people, who asked not to be named since the discussions are private.
The company sees an opportunity within the sector as agricultural powerhouse Brazil heavily relies on fertilizers imports. Petrobras was a significant producer but decided to exit the business in 2018 under the previous government. The war in Ukraine disrupted fertilizer imports and sent prices to multi-year highs, prompting the administration of President Luiz Inacio Lula da Silva to rebuild the domestic industry.
Located in the country’s central west, work on UFN-III was halted in 2014 with around 80% of it completed. Petrobras managers are double-checking the $800 million investment forecast while also discussing potential partnerships, the people said.
Investment for the unit is expected to be detailed in Petrobras’s spending plan for 2025-2029 due in November, they added, without ruling out resuming works in December.
Petrobras said in response to a request for comment that it is still evaluating the project and has no estimate of its value.
Resuming viable operations in assets that already belong to the company is the firm’s priority. Together, the four Petrobras fertilizer plants currently halted have capacity to supply 35% of Brazil’s demand for urea, one of the country’s most-used fertilizer. Petrobras announced last month the resumption of its Araucaria fertilizer unit, which should happen by May 2025. It’s also negotiating with fertilizer maker Unigel a solution to two leased nitrogenous units in Bahia and Sergipe.
Petrobras is also looking into innovation in the segment, such as ways of producing green ammonia. The oil giant announced Friday a partnership with Brazilian agricultural research company Embrapa for research on renewable raw materials to obtain low-carbon products, including biofuels, green chemistry and fertilizers.
The company aims to “increase the availability of fertilizer products in the domestic market and meet the goals of the National Fertilizer Plan,” Chief Executive Officer Magda Chambriard said in a statement.
(Updates with details on Embrapa partnership and Petrobras’s CEO comments in last two paragraphs.)
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