A Brazilian Supreme Court judge has issued an injunction suspending some major divestments by Petroleo Brasileiro SA, according to a document seen by Reuters on Monday, possibly creating a major headache for the state-run oil firm.
The decision, issued on Friday by Justice Edson Fachin, calls for the suspension of the sale of Petrobras’ TAG pipeline unit and eight of the companies’ refineries, as well as the sale of its Araucaria Nitrogenous fertilizer unit.
It was not immediately clear how the ruling would work given that Petrobras already sold TAG to Engie SA in April and received approval from Brazil’s antitrust regulator for the deal.
The TAG pipeline unit sold for $8.6 billion and the firm has said the refineries could fetch some $15 billion, making these asset sales key for the firm’s deleveraging plans.
Petrobras said in a statement on Monday it will study the decision and take action to defend its interests and those of its investors. It stressed the importance of its divestment plans to reduce its indebtedness.
Engie did not reply immediately to a request for comment.
Petrobras divestments, along with many other contentious economic issues in Brazil, have often been subject to contradictory decisions by high-ranking judicial authorities in recent years. The TAG divestment, for instance, had previously been given the go-ahead by Brazil’s second highest court, the Supreme Judicial Court, and by the nation’s solicitor-general.
Justice Fachin argued that the earlier decision contradicted a previous ruling by Supreme Court judge Ricardo Lewandowski.
Coming in response to a lawsuit brought by a union against the planned divestment of Petrobras refineries, the ruling said the sale of such assets must be carried out in an auction format and require Congressional approval.
The oil workers union, Sindipetro Unificado-SP, welcomed the decision as “a new victory” in its efforts to stop the privatization of Petrobras.
Brazil-listed preferred shares in Petrobras were little changed on Monday, closing 0.57 up, underperforming the benchmark Bovespa index, which was up 1.32 percent.
Source: Reuters.com