Petrobras suspends major asset sales on court decision

July 3, 2018

SAO PAULO (Reuters) – State-run Brazilian oil company Petroleo Brasileiro SA (Petrobras) (PETR4.SA) said on Tuesday it was suspending some asset sales after a Supreme Court justice ruled that privatizations must be approved by Congress.

While considering which legal actions to take, Petrobras said in a securities filing it would suspend the sale of refineries, gas pipeline company Transportadora Associada de Gas (TAG) and the Araucaria fertilizer factory.

Justice Ricardo Lewandowski ruled last week that any sale of publicly held shares in state-controlled companies or their subsidiaries require congressional approval.

Petrobras is working to sell $21 billion in assets over a two-year period to reduce its debt.

Preferred shares of Petrobras rose about 1 percent on Tuesday, in line with the benchmark Bovespa stock index .BVSP.

The sale process of gas pipeline company TAG is in its final stages. Petrobras is discussing contracts with France’s Engie SA (ENGIE.PA) and was expected to submit the deal for rebids by the other two consortia interested in the acquisition, led by Australia’s Macquarie Group Ltd (MQG.AX) and EIG Global Energy Partners LLC with United Arab Emirates’ sovereign wealth fund Mubadala Development Co.

Efforts to sell the Petrobras refineries were just beginning and had drawn lukewarm investor interest due to potential changes in fuel pricing policies.

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