RIO DE JANEIRO - Brazil's state-run oil company Petrobras is wrapping up due diligence for a bid on the Mataripe refinery it sold to Abu Dhabi sovereign fund Mubadala for $1.65 billion in 2021, three people familiar with the matter told Reuters.

President Luiz Inacio Lula da Silva campaigned against the sale of Petrobras refineries and has pushed for the company to accelerate job-creating investments in the segment. However, an agreement on the structure and price of a possible buyback has not been reached, said people involved in the talks.

Those discussions could delay the deal, which has been in the works for several months, given that the refinery, also known as RLAM, was sold below market value by some accounts.

Brazil's Comptroller General found that Petrobras may have sold the refinery at a discount during the COVID-19 pandemic. The union-backed Institute for Strategic Studies in Oil, Natural Gas and Biofuels (Ineep) estimated in 2021 that the refinery was worth between $3 billion to $4 billion.

Petrobras did not immediately respond to a request for comment. Mubadala representatives declined to comment.

Discussion of a possible buyback surfaced last year when Mubadala proposed a joint investment in traditional refining and a new biorefinery sharing infrastructure with the Mataripe refinery in Bahia state, a stronghold of Lula's Workers Party.

"If you ask me if Brazil should have sold refineries, I would peremptorily respond: No," Brazil's Mines and Energy Minister Alexandre Silveira told Reuters this week.

He said in an interview that he is also talking to representatives of the Mataripe refinery but said Petrobras will only enter into an agreement if the buyback is "economically viable."

According to a person familiar with talks, Petrobras was first planning to buy an 80% stake in Mataripe and make a minority investment in a biofuel plant with Mubadala. The same person said it is unclear if a deal will proceed with that structure after Lula replaced the CEO of Petrobras in May.

Petrobras has also discussed offering Mubadala the same price it paid for the refinery in 2021, plus interest and reimbursement of the sovereign fund's investments to update the plant, according to two people close to the talks.

Petrobras owns 11 refineries producing about 80% of domestic fuel production after selling two plants under former President Jair Bolsonaro, when the oil company shed downstream assets to focus on deepwater exploration.

Built in the 1950s, RLAM is Brazil's second largest refinery, with the highest capacity for production of gasoline, diesel and other oil derivatives in north and northeast Brazil, according to operator Acelen, which is controlled by Mubadala.

Silveira said Mubadala is looking to sell RLAM because it made the acquisition under the assumption that Petrobras would sell several more refineries. Instead, Mubadala's share of the refining market is still dwarfed by Petrobras, on which it depends for crude oil.

"This buyback will have to go through, it no longer makes sense for a private investor like Mubadala to own a refinery in Brazil," said Adriano Pires, an oil industry analyst once floated as a potential Petrobras CEO under the last government.

(Reporting by Luciana Magalhaes in Sao Paulo and Marta Nogueira in Aracaju Editing by Brad Haynes and Marguerita Choy)