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Brazil's Petrobras faces legal risks after halting asset sales -lawyers

Published 03/03/2023, 03:13 PM
Updated 03/03/2023, 04:41 PM
© Reuters. FILE PHOTO: A logo of Brazil's state-run Petrobras oil company is seen at their headquarters in Rio de Janeiro, Brazil October 16, 2019. REUTERS/Sergio Moraes/File Photo

By Marta Nogueira

RIO DE JANEIRO (Reuters) -Petrobras could face lawsuits for breach of contract after the company halted planned asset sales at the request of Brazilian leftist President Luiz Inacio Lula da Silva's government, specialist lawyers said on Friday.

Petroleo Brasileiro SA, as the state-controlled company is formally known, was asked this week to halt for 90 days divestitures worth more than $2 billion, with the government saying it was reevaluating the country's national energy policy.

Lula appointee Petrobras Chief Executive Jean Paul Prates told reporters on Thursday "everything is halted for analysis." Petrobras has yet to formally confirm its decision to the government.

"There is no possibility of suspending signed contracts. There is no stipulation for that," Alexandre Calmon, lead partner of law firm Campos Mello Advogados' energy area, told Reuters.

"That would be a breach of contract," he said, adding if "Petrobras fails to do something that it is obligated to do, it can be held responsible."

The lawyer also explained that sale processes already signed but not concluded are not under the control of the oil company. There are clauses in the contract that must be fulfilled by all parties involved, Calmon said.

Petrobras declined to comment further.

Giovani Loss, a partner specializing in oil and gas at law firm Mattos Filho, also flagged the "potential for lawsuits against Petrobras for intentionally canceling signed transactions."

"Suspending the sales for political reasons leads to a discussion about breach of contract," he added, but noted that he could not "remember a similar situation in Brazil."

Deals yet to be completed include the sale of 22 assets to 3R Petroleum for $1.38 billion and the sale of the Norte Capixaba cluster to Seacrest for up to $544 million.

Brazil's mining and energy ministry and Seacrest - as well as BW Energy and Grepar, which also have contracts to buy assets from Petrobras - did not immediately respond to requests for comment. 3R Petroleum declined to comment.

© Reuters. FILE PHOTO: A logo of Brazil's state-run Petrobras oil company is seen at their headquarters in Rio de Janeiro, Brazil October 16, 2019. REUTERS/Sergio Moraes/File Photo

The sale halt marks a major shift from the stance taken by former President Jair Bolsonaro's administration, which oversaw a number of Petrobras assets sales, including oilfields and refineries.

"To be honest, what happened didn't surprise me because the Workers Party in its government program said that it was going to do exactly that, that it was going to cancel (the sales)," said Paulo Valois, partner at Schmidt Valois Advogados.

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