Raizen SA is reportedly seeking to sell its oil refinery and gas station chain in Argentina, hiring JPMorgan for the sale. This potential divestment comes in light of rising borrowing costs and follows a trend of multinational companies exiting the Argentine market despite new economic reforms proposed by President Javier Milei. Raizen’s significant operations include the Dock Sud refinery and a network of gas stations, which collectively represent a notable share of the country’s fuel market.
Raizen SA, a Brazilian energy firm, is reportedly considering selling its oil refinery and gas station network in Argentina, employing JPMorgan Chase & Co. as the managing bank for this potential sale. This information comes from anonymous sources familiar with the situation, as official comments from Raizen and JPMorgan have not been provided. Raizen, a partnership between Shell Plc and Cosan SA, is facing financial pressures due to rising borrowing costs in Brazil.
The proposed sale signifies Raizen’s possible exit from the Argentine market, joining a number of multinational corporations, such as Exxon Mobil and Mercedes-Benz, that have divested their interests in Argentina over the past year, despite renewed investor optimism regarding President Javier Milei’s economic reforms. As Brazil’s largest ethanol producer, Raizen is contemplating divestments while pausing its expansion plans, influenced by market conditions.
Raizen operates the Dock Sud oil refinery in Buenos Aires, the oldest in Argentina, with a daily capacity of 100,000 barrels. The firm also maintains approximately 700 gas stations, which represent 18% of the country’s gasoline and diesel sales, trailing only YPF SA. Raizen acquired these assets for nearly $1 billion in 2018 during a previous phase of economic reforms underlining the volatility of Argentina’s energy sector.
Under President Milei, who has advocated for deregulating the economy, fuel prices are now reflective of the international market, following years of government control used to manage inflation. Despite efforts to reshape the economic landscape, the current environment continues to pose challenges for industrial players, as evidenced by ongoing divestments from major operators in the country.
In summary, Raizen SA’s exploration of selling its Argentine assets highlights a significant shift within the country’s energy market, coinciding with broader economic reforms under President Milei. As rising borrowing costs impact Raizen’s financial stability, this potential divestment underscores a trend of multinational firms reevaluating their positions in Argentina, amid a backdrop of ongoing market volatility and investor reforms.
Original Source: www.livemint.com
