Government acknowledges purchase of US refinery was a failure
The Brazilian government issued a note on Wednesday (Mar. 19) acknowledging that Petrobras’s purchase in 2006 of oil refinery Pasadena Refining System Inc., in Texas, was based on an inaccurate technical report.
In an article published Wednesday (Mar. 19), newspaper O Estado de S. Paulo claims that the purchase was authorized by President Dilma Rousseff, Brazil’s Chief of Staff and head of Petrobras’s board of directors at the time.
“Petrobras’s acquisition of 50% of the Pasadena refinery was authorized by the board of directors on February 3, 2006, based on an Executive Summary prepared by the director of the International Area. Later on, it became known that the said summary was technically and legally flawed, as it did not make any reference to clauses Marlim and Put Option, which were part of the contract, and which, if known, would certainly not have been approved by the board,” reads the note issued by the presidential palace on Wednesday (19).
The purchase of the refinery is being investigated by Brazil’s Federal Police, the Court of Accounts of the Union, the Public Prosecution Office and the National Congress for overpricing and embezzlement of public funds.
According to the Presidency of the Republic, the board of directors of Brazil’s state-run company only became familiar with the clauses in March, 2008, when consulted about the acquisition of the other half of the refinery, specified in the contract.
“At this opportunity, the board became aware of the said clauses, and therefore learned that the permission to buy the first 50% had been granted based on incomplete information,” the note reads.
Then – a statement released by the president’s office says – the board decided not to buy the stake and launch an arbitration case against Belgian Astra Oil, a partner of the Brazilian state-run government in the enterprise. In 2012, after the ruling of the New York International Chamber of Arbitration, corroborated by the superior courts in Texas, Petrobras was obligated to make the purchase.
Put Option is a clause that makes it mandatory for one of the parties in the agreement to buy the other half of the shares in Pasadena in case of divergence among partners. After the dispute with Astra Oil over investments, Petrobras was forced to acquire the refinery in its entirety. The article reports that Marlim, the other clause, ensured Petrobras’s partner a yearly profit of 6.9%, regardless of eventual adverse market conditions.
Translated by Fabrício Ferreira
Fonte: Government acknowledges purchase of US refinery was a failure
