Petrobras to discuss resuming nitrogen fertilizer plant construction, say local officials

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By Ana Mano

SAO PAULO, Feb 3 (Reuters) -The board of Brazil's state-run oil firm Petrobras PETR4.SA is expected to discuss this month plans to resume construction of a nitrogen fertilizer plant in the central-western part of the country, two government officials in Mato Grosso do Sul state told Reuters.

Jaime Verruck, the state's secretary for environment and development, said he expects Petroleo Brasileiro SA, as the firm is known formally, to finish the plant in the town of Tres Lagoas after getting clearance from the board.

Petrobras declined to comment on the possibility of resuming the project, which was halted in 2014 with about a fifth of construction work remaining.

The company said last month it was scrapping plans to sell the project.

"The indication at the moment, but this depends on the approval of the Petrobras board of directors, is that Petrobras itself would conclude the work," Verruck told Reuters.

Renewed investment in fertilizer production would mark a dramatic shift for Petrobras, which spent years trying to sell the Tres Lagoas project and other such assets to focus on offshore petroleum fields. It would also spell a reboot for a national fertilizer production plan to reduce import dependence.

Management appointed by Brazil's new government has signaled plans to boost investments and diversify Petrobras operations beyond oil and gas.

Jose Moraes, the municipal development secretary in Tres Lagoas, said local authorities are excited about the fertilizer venture.

"The prospects are the best possible," Moraes said, adding that local authorities "will do what it takes" to advance the project.

Much of the work so far will have to be revisited, however, due to the extended halt to construction, with nothing but maintenance to on-site equipment in the interim, Moraes said.

Verruck said the plant could be finished in two years, with capacity to replace the equivalent of 18% of Brazil's urea imports in 2022 and 12% of ammonia imports, he said.

Moraes, who said municipal authorities participated in talks with Russia's Acron when it was negotiating to buy the plant, said that deal collapsed last April after the prospective buyer's agreement to buy gas from Bolivia fell through.

Reporting by Ana Mano
Editing by Frances Kerry


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