STF suspends decree that expedites the sale of Petrobras’ oil areas

Rio de Janeiro – Federal Minister of Justice Marco Aurélio Mello of the Federal Supreme Court (STF) decided on Wednesday to suspend the effects of the decree that defines the rules for the assignment of rights of exploration and development of oil and natural gas production by Petrobras. In practice, the decision leaves the state’s asset sale program without clear rules. The injunction was requested by the Workers’ Party (PT).

According to lawyer Ali Hage of Veirano Advogados, the decision brings back doubts about the sale of Petrobras interests in blocks or exploratory fields directly to interested investors, without public hearing. According to him, with the suspension of the decree, Petrobras will also not be able to make purchases of goods and equipment with exemption from bidding in the areas where it operates in partnership with private investors.

– Is bad. Take one step forward, then two steps back. The decision brings back the legal uncertainty over the sales of holdings already made by Petrobras, as well as for the fields that are currently being negotiated, “said Hage.

Assignment of the Congress

Attorney Giovani Loss, of Mattos Filho Advogados, also considered that the decision brings legal uncertainty to the state’s asset sales process, surprising the market, since it is expected that the STF plenary will analyze the matter on February 27 of 2019.

– Petrobras works to reduce its indebtedness through the sale of assets, and as the judiciary has appealed against the sale of these assets, it complicates the company’s strategy to reorganize itself strategically, said Loss.

In his decision, Minister Marco Aurélio Mello says that, because of the urgency of the topic, he decided to take the temporary decision until the matter is considered by the STF plenary. He maintains that it is up to the National Congress to legislate on general rules of bidding and hiring, in all modalities, to reach the companies of mixed economy “genre of which Petrobras is kind”.

“The conclusion is unique: the head of the Executive disciplined matter constitutionally reserved to the law in a formal sense,” said the minister. Petrobras did not comment.

Between 2017 and 2018, Petrobras sold US $ 8.3 billion in assets, well below the US $ 21 billion target, mainly due to questions from the courts. In addition to actions against the sale of holdings in oil fields, the state company was forced to suspend the sale of TAG, a gas pipeline network in the Northeast, as well as the project to sell the refinery control. In addition, Cade suspended the sale of Liquigás, the LPG distributor for the Ultra group. In the 2019/2023 business plan, the new goal is to sell $ 26.9 billion.

Lawyer Ali Hage recalls that the decree was made, based on the understanding of the Court of Auditors of the Union (TCU) on how to make the process of selling assets of the state company more transparent and competitive. He does not believe that the suspension of the decree invalidates sales of assets, but it hinders the negotiations:

– Petrobras is undermined. This will influence the current negotiations in progress, and even the already closed processes.

Source: O Globo | Ramona Ordoñez

Personal Opinion:

This Supreme Court Justice took a unitary decision without consulting with the rest of the Court. He is same that made decision to free felons, such as Lula, later revoked by the President of the Supreme Court. The judge is known for being vain and his decision is just another move to prove his authority since the court had decided to schedule this and other decisions for April next year against his wishes. Public opinion was immediate and most likely his decision will be overturned. Unfortunately the damage to the image of the Brazilian judicial system has been done not to mention the problems caused to the Petrobras divestment program.

 

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