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Petrobras to probe refinery contracts for bribery

05.06.2014  | 

The company created two internal commissions to evaluate agreements related to the Abreu e Lima and Comperj refineries, and work should be completed within 60 days, the report said.



Petroleo Brasileiro, Brazil’s state-controlled oil company, is probing contracts tied to the $32 billion construction of two refineries after its former head of refining was arrested for allegedly taking bribes.

The company created two internal commissions to evaluate agreements related to the Abreu e Lima and Comperj refineries, and work should be completed within 60 days, according to a regulatory filing dated April 30 that doesn’t mention the reason for the investigation.

Former refining chief Paulo Roberto Costa was arrested March 20 for allegedly taking part in a money-laundering scheme and accepting kickbacks related to the Abreu e Lima project between 2011 and 2013.

Petrobras, as the company is known, has spent $22.4 billion on the two refineries, according to the filing. Abreu e Lima, in the northeastern state of Pernambuco, will process 230,000 bpd when it opens in the fourth quarter, almost three years behind schedule. Its $18.5 billion price tag compares with an original budget of $2.5 billion. 

The 150,000-bpd Comperj refinery, in Rio de Janeiro, is set to cost $13.5 billion by the time it opens in 2016, four years later than originally planned and 61% more expensive.

CEO Maria das Gracas Foster had told newspaper O Globo in an interview in March that the Rio-based oil producer wouldn’t be subjecting Abreu e Lima to an internal audit.

The company’s press office didn’t immediately respond to a phone call and an e-mail from Bloomberg News seeking comment during a national holiday.

Costa’s lawyer, Fernando Fernandes, didn’t respond to a phone call to his office in Brasilia. Fernandes told newspaper Folha de S.Paulo on April 25 that there is no proof that the former director received any illegal payments while he was with Petrobras.

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It was not realistic to think that an entire 230,000 bpd refinery could be built for a mere $2.5 billion. Sounds like there is more than one person who should have their work audited.


Petrobras is famous for its projects way out of schedules and budgets. Bad planning, too optimistic cost evaluation and domestic enforced purchasing sum up to give these resaults. Other factors might be present, but it wil not solve the main problem.

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