Brazil's Petrobras To Start Work On Maranhao Refinery Friday

RIO DE JANEIRO (Dow Jones)--Brazilian state-run energy giant Petroleo Brasileiro (PBR), or Petrobras, will lay the cornerstone for its "Premium 1" refinery in northern Brazil on Friday.

A ceremony that will include President Luiz Inacio Lula da Silva will mark the start of construction at Bacabeira in the northern state of Maranhao, Petrobras said. Work on the refinery is expected to be completed in September 2013.

The refinery is one of two so-called premium fuels plants that will process oil from recently discovered offshore deposits. The "Premium 1" refinery will have installed capacity to process 300,000 barrels a day in its initial phase.

The refinery will produce high-quality diesel fuel, aviation fuel, naphtha, liquified petroleum gas, bunker fuel and coke.

A second phase at the refinery will double capacity to 600,000 barrels a day by September, 2015.

The Maranhao refinery will be complemented by a second 300,000-barrel-a-day refinery in Ceara state.

Together, the two refineries are expected to cost Petrobras $20 billion.

Petrobras plans to build a total of four new refineries as part of its effort to boost capacity to 3.6 million barrels a day. The company currently processes about 1.9 million barrels daily.

Petrobras is also conducting site work for the planned Abreu e Lima refinery in Pernambuco state, which will include Venezuela state oil company Petroleos de Venezuela, or PdVSA, as a partner. The Comperj petrochemicals complex in Rio de Janeiro is also under construction, although the focus of the refinery is now expected to shift toward fuels processing rather than petrochemicals.