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Brazil to probe Petrobras deal for Texas refinery

04.24.2014  | 

Brazil’s top court allowed opposition parties to begin a congressional inquiry into an oil refinery purchase that resulted in a $530 million loss to state-run Petrobras.



Brazil’s top court allowed opposition parties to begin a congressional inquiry into an oil refinery purchase that resulted in a $530 million loss to state-run Petroleo Brasileiro, or Petrobras.

Congress may convene an inquiry dealing exclusively with Petrobras, as the Rio de Janeiro-based company is known, Justice Rosa Weber said in a ruling posted on the court’s website. The opposition wants to probe Petrobras’s purchase of Pasadena Refining System from Astra Oil Trading, which said it bought the plant for $42.5 million in a 2005 report, a fraction of the $1.25 billion Petrobras says it paid.

The decision, which could be overturned by a majority of Supreme Court judges, paves the way for a prolonged political battle and media spotlight on the scandal involving Brazil’s top state-run company just before presidential polls.

President Dilma Rousseff, who was then the chairwoman of Petrobras, has said that directors approved the $370 million acquisition of a 50% stake in the refinery without knowledge of a put option that in 2012 forced the company to buy the rest as part of a $820.5 million legal settlement.

The investigation doesn’t need to include allegations of irregularities involving parties of the two leading opposition candidates facing Rousseff in Oct. 5 elections, Weber said.

Company’s Loss

Petrobras CEO Maria das Gracas Foster said during an April 15 Senate hearing that the acquisition “was not a good deal” and cost the state-run oil company a $530 million loss. Foster said Astra paid at least $360 million for the refinery, including investments it made before selling to Petrobras.

Astra said the success of the refinery purchase surpassed “any reasonable expectation” because rising demand caused by political instability and severe storms boosted refining margins to record highs following the deal.

While surveys show Rousseff would have enough support for a first-round win, her approval ratings are dropping as growth slows and inflation quickens. The negative evaluation of her performance rose to 28% from 22%, according to a Vox Populi poll released April 17 in the online edition of Carta Capital magazine. Her positive evaluation was 32%, compared with 34% in February.

Support for opposition Senator Aecio Neves was 16% in the Vox Populi poll, compared with 17% in the previous poll. Former Pernambuco State Governor Eduardo Campos garnered 8%, compared with 6%.

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