Petrobras – Provision Related to Decision on the Arbitration Filed by Vantage

Rio de Janeiro, February 7, 2019 – Petróleo Brasileiro S.A. – Petrobras, following up on  the Press Releases of 07/07/2018 and 08/29/2018, hereby informs that, within the scope of its ongoing process of contingency assessment, it will make a provision for the amount provided in the award issued in the arbitration filed by Vantage Deepwater Company and Vantage Deepwater Drilling Inc. against the Company and other companies of the Petrobras System.

The Vantage arbitration arose out of an agreement for drilling services procured by corruption, as revealed by Operation Car Wash. On 07/03/2018, the arbitration tribunal, formed by three arbitrators, decided by majority vote, with one dissenting vote, that Petrobras and its subsidiaries should pay Vantage the amount of US$ 622.02 million, plus compound interest of 15.2% p.a., as compensation for the early termination of said agreement and invoices related to the drilling of a well in the Gulf of Mexico.

The dissenting arbitrator refused to sign the final decision and, in writing, issued his dissenting vote and objection to the arbitration award, stating that “the prehearing, hearing, and posthearing processes that led to the issuance of the Final Award have denied the Respondents in this proceeding the fundamental fairness and due process protections meant to be provided to arbitrating parties by Sections 10(a)(1), 10(a)(2), 10(a)(3), 10(a)(4), and Chapters 2 and 3 of the Federal Arbitration Act, 9 U.S.C. §1, et seq.”.

On 08/31/2018, Petrobras filed a motion to vacate the award before a Federal Court in Texas based among other arguments on the dissent vote, and continues to vigorously pursue the annulment of the arbitration award in defense of its rights. A final hearing on the case will be held before the Federal Court in Texas on 03/08/2019.

The effect resulting from this provision will be recognized in the consolidated results of the Petrobras System for the 4th quarter of 2018.

Leave a Reply