Raizen SA is exploring the sale of its Argentine oil refinery and gas stations, hiring JPMorgan for the process. This move comes amid a trend of multinational exits from Argentina, despite potential economic reforms under President Javier Milei. Raizen’s decision is influenced by rising borrowing costs and aims to mitigate financial strain.
Raizen SA, a joint venture between Shell Plc and Cosan SA, has initiated plans to divest its oil refinery and gas station network in Argentina, having engaged JPMorgan Chase & Co. for assistance in this sale. This decision reflects a broader trend of multinational corporations, including Exxon Mobil and HSBC Holdings Plc, exiting the Argentine market amidst shifting economic conditions under President Javier Milei’s administration.
Raizen, Brazil’s leading producer of ethanol, is considering asset sales and slowdown in expansion due to rising borrowing costs in Brazil affecting its financial stability. The company operates the Dock Sud oil refinery, Argentina’s oldest, with a capacity of 100,000 barrels per day, trailing only behind two state-owned YPF facilities. Furthermore, its network of approximately 700 gas stations holds an 18% share of the national fuel market.
Acquired for nearly $1 billion in 2018 from Shell, Raizen’s assets reflect Argentina’s prior market-oriented reforms. Following a phase of extensive government regulation from 2019 to 2023, the election of Milei has introduced a campaign to deregulate the economy, particularly in energy. Notably, Milei has removed price controls on crude and fuel that were originally intended to mitigate inflation, aligning domestic fuel prices with international market rates.
In summary, Raizen SA’s potential sale of its Argentine assets reflects mounting challenges in the energy sector as economic reforms unfold under President Javier Milei. The engagement of JPMorgan Chase & Co. for managing this sale underscores the notable trend of multinational corporations reassessing their operations in Argentina amid financial uncertainties and a changing regulatory landscape. Raizen’s strategic divestment is emblematic of broader market dynamics affecting multinational firms in the region.
Original Source: www.livemint.com
