Petrobras intends to produce 35% of the demand for nitrogen fertilizers in Brazil in 2028. Magda Chambriard, president of Petrobras, in a press conference this Wednesday afternoon, highlighted that the number will be reached with the entry into operation of the nitrogen fertilizer factories (Fafens) in Bahia and Sergipe, in addition to the units in Paraná and Mato Grosso do Sul.
The resumption of the units is part of the Lula government’s strategy of returning Petrobras to the fertilizer sector in order to reduce Brazil’s dependence on imports, which account for around 85% of national consumption.
The units in Bahia and Sergipe had already been resuming operations since January this year. Together, the plants will produce ammonia, urea and Arla 32 (Automotive Liquid Reducing Agent), with initial investments of R$38 million in each. Both units use natural gas as their main raw material. Tomorrow, President Luiz Inácio Lula da Silva will visit the Bahia unit at 2 pm accompanied by the president of Petrobras.
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Ammonia is the raw material for the production of fertilizers and serves as an input for the production of urea, which, in turn, produces nitrogen fertilizers, used in agriculture. In addition to agriculture, urea can be directed to the textile, paint and paper and cellulose industries. Arla 32 is used in trucks, buses and diesel vehicles to reduce pollutant emissions.
If you add the two Fafens and the Araucária (Ansa) unit in Paraná, which has also been restarted, they will account for 20% of all urea demand in Brazil. The company’s goal is to increase national production to 35% in 2028, with the completion of works on the Nitrogen Fertilizer Unit III (UFN III), in Três Lagoas, in Mato Grosso do Sul. The project had around 80% of the works completed, according to information provided by the state-owned company in April this year.
– With the four units in 2028, we will be able to produce around 35% of all the nitrogen fertilizer that Brazil demands. Fertilizer is important for Brazil and for Petrobras. And we will expand the use of natural gas. Therefore, we are resuming the manufacture of fertilizers in Bahia, which was a Petrobras company that was hibernated in 2019 and was later stopped in 2023 — said Magda.
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Magda also recalled that Bahia will receive US$5 billion in investments over the next five years in exploration and production. There will be 100 wells and interventions to be carried out in Recôncavo. The objective is to more than double production in the state of Bahia.
There is also R$115 million for the production of biodiesel at the biodiesel plant in Candeias – the executive listed.
Also in Bahia, the state-owned company is in talks to repurchase the Mataripe Refinery, sold, under the management of Jair Bolsonaro, to Mubadala, the sovereign wealth fund of the United Arab Emirates.
Understand the Fafens controversy
The Bahia Nitrogen Fertilizer Factory, in Camaçari, will produce 1,300 tons of urea per day, which corresponds to 5% of the national market. In Sergipe, located in the municipality of Laranjeiras, the unit has the capacity to produce 1,800 tons of urea per day, equivalent to 7% of the national market. Ansa will account for 8% of demand, followed by UFN III, with 15% of demand.
In 2019, Petrobras leased the Bahia and Sergipe units to Unigel, in a ten-year contract signed during the state-owned company’s divestment policy. But the situation began to deteriorate in 2023, when Unigel halted operations citing economic unviability due to the price of gas. To try to reactivate the plants, Petrobras and Unigel negotiated a “tolling” contract, whereby the state-owned company would supply natural gas and buy the production from the factories, while Unigel would carry out the industrial operation.
However, the agreement was targeted by the Federal Audit Court (TCU), which pointed out the risk of losses estimated at around R$487 million for Petrobras. The agreement ended up not coming into force and in June 2024 the companies announced the termination of the contract. Last year, the state-owned company regained ownership of the factories.
