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Sources: Petrobras is in the initial stages of talks with Mubadala to purchase back Brazil refinery.

Two sources familiar with the matter said on Monday that the Brazilian'state-run oil company Petrobras has begun direct negotiations with Abu Dhabi’s sovereign wealth fund?Mubadala to repurchase Brazil's Mataripe refinery. Luiz inacio Lula da silva said last month Petrobras will repurchase the refinery that was sold under the previous administration of Jair Bolsonaro. Petrobras announced that it would 'analyze a possible deal' after Lula made his remarks.

Sources said that a deal could be signed by the end of this year. Mataripe is Brazil's second-largest refinery but only operates at 60% capacity. Petrobras plants are running at maximum capacity to boost local production.

Petrobras plans to increase its refining capacity 'have become more urgent after the U.S./Israel conflict with Iran caused global prices of diesel to soar, 'impacting Brazilian consumers because the country is dependent on foreign 'diesel. Brazil imports approximately a quarter its total diesel requirements.

Lula is 'concerned about the rise in fuel prices ahead of an October presidential election, in which he will seek to win a fourth term.

Petrobras declined to comment immediately. Mubadala refused to comment. Reporting by Rodrigo Viga Gaier, Writing by Andre Romani & Fabio Teixeira ; Editing by Natalia Siniawski & Inigo Alexander

(source: Reuters)