Renewable Energy

Brazil Supreme Court minister holds up sale of Petrobras units

Credit: REUTERS/Paulo Whitaker

A Brazilian Supreme Court minister has issued a ruling that calls for the suspension of 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.

By Ricardo Brito

BRASILIA, May 27 (Reuters) - A Brazilian Supreme Court minister has issued a ruling that calls for the suspension of some major divestments by Petroleo Brasileiro SA PETR4.SA, according to a document seen by Reuters on Monday, possibly creating a major headache for the state-run oil firm.

The ruling, issued on Friday by Edson Fachin, a minister for Brazil's STF Supreme Court, 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 Nitrogenos fertilizer unit.

The efficacy of the ruling was not immediately clear, as Petrobras already sold TAG to Engie SA ENGIE.PA 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 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 a minister on Brazil's slightly lower Supreme Judicial Court, or STJ, and by the nation's solicitor-general.

The ruling argued that the previous STJ decision contradicted a previous ruling by Ricardo Lewandowski, another minister on the STF.

Coming in response to a lawsuit brought by a union against the planned sale of Petrobras refineries, the ruling said that such assets must be done in "auction" format.

Petrobras and Engie did not immediately respond to a request for comment.

Brazil-listed preferred shares in Petrobras were little changed on Monday, trading up 1.2 percent in afternoon trade, slightly underperforming the benchmark Bovespa index .BVSP, which was up 1.55 percent.

(Reporting by Ricardo Brito in Brasilia Writing by Gram Slattery Editing by Jeffrey Benkoe and Matthew Lewis)

((gram.slattery@thomsonreuters.com; +55-21-2223-7117))

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