Petrobras Starts Furnaces at RNEST Refinery

Petroleo Brasileiro SA began operating the furnaces in the atmospheric distillation unit at its Abreu e Lima or "RNEST" refinery near Recife, said the state-run oil company in a statement on Thursday.

The furnaces began operation Wednesday, the same day Brazil's oil regulator, the ANP, approved the operation of several other units that are also part of the refinery's first 115,000-barrel-a-day production system, or "train."

Those approvals mean the refinery can soon start producing both gasoline and diesel fuel, the ANP said on Thursday. The refinery was originally expected to start operations four years ago.

The Brazilian state of Pernambuco has limited processing capacity at the first train to processing 45,000 barrels a day of crude, or 39 percent of the train's capacity, until sulfur and nitrogen control systems are fully operational.

A second 115,000 barrel a day train is expected to start operation sometime in the second half of 2015.

The refinery, expected to cost about $20 billion when complete, about five times its original budget, is one of the most expensive ever built. It is also at the center of a widening political corruption scandal.

Prosecutors and police have alleged that Petrobras officials conspired with contractors at the refinery to inflate the price of contracts. The contractors then allegedly kicked back the excess to political parties and politicians as campaign contributions and bribes.

Petrobras was granted a permit from Brazil's petroleum regulator, the ANP, to operate the unit last month and has been preparing the unit for the furnace start-up for several weeks. The refinery is also known as RNEST, an Portuguese acronym for Northeast Brazil Refinery.

An atmospheric distillation unit uses heat to separate crude oil into products of different densities, or fractions. Efficient refining of the heavy crude Petrobras plans to use at the refinery requires other processes such as treatment with catalysts and water to efficiently produce products such as diesel fuel.

(Reporting by Jeb Blount; Editing by David Gregorio, Reuters)