Supreme Court Suspends Judgment of Lawsuit Against Sale of Petrobras Refineries

Petrobras’ Decision to Sell Refineries Aligns with National Energy Policy and Does Not Contradict STF’s Decision on Privatizations

The judgment of the Congressional action that was scheduled to take place by Friday and sought to block the immediate sale of refineries by Petrobras was suspended yesterday (09/21) by the president of the STF (Federal Supreme Court), Minister Luiz Fux. Even though the pre-salt has the largest natural gas reserves in the world, Petrobras will double its LNG imports due to lack of infrastructure in Brazil

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The process must now be judged orally during either an in-person session or a live-streamed video conference, which has yet to be scheduled. It is now up to the president of the STF, Minister Luiz Fux, to arrange the judgment.

The case was being judged in a virtual plenary, a digital environment in which the ministers have a deadline to vote in writing. The analysis was interrupted with a score of 3 to 0 in favor of granting a preliminary injunction (provisional decision) to suspend the sale of refineries by Petrobras.

The ministers voting in favor of the injunction were rapporteur Edson Fachin, and ministers Ricardo Lewandowski and Marco Aurélio Mello. The others had not yet voted. With the highlight, however, the score resets to zero, and they will have to express their opinions again.

The process occurs amid already announced plans by Petrobras to divest 100% of its stake in at least six refineries spread across the country. They are: Landulpho Alves (RLAM) in Bahia; Abreu e Lima (RNEST) in Pernambuco; Presidente Getúlio Vargas (Repar) in Paraná; Alberto Pasqualini (Refap) in Rio Grande do Sul; Gabriel Passos (Regap) in Minas Gerais; and Isaac Sabbá (Reman) in Amazonas.

The first refinery to go to market, Rlam in Bahia, is in exclusive negotiations with the Mubadala fund from Abu Dhabi. Additionally, three Brazilian and foreign companies are targeting Petrobras’ refinery in the state of Paraná (Repar), namely: the Indian conglomerate Essar, Grupo Ultra, and the Chinese multinational Sinopec. Petrobras has opened a new round of negotiations with the parties involved to receive new proposals.

Petrobras’ strategy is to navigate a decision made by the Supreme plenary, which in June of last year decided that parliamentary authorization is required for the sale of state-owned companies. The exception is subsidiaries, which can be sold without the approval of the Congress, according to the decision.

Petrobras’ decision to sell part of its refining assets aligns with national energy policy and does not contradict the STF’s decision on privatizations, argued the Ministries of Economy and Mines and Energy in a joint statement earlier.

Fachin agreed with the arguments of the request, voting for the suspension of negotiations at least until the Supreme plenary definitively discusses whether the company’s strategy disrespects the court’s decision or not. “It is not being asserted that this sale is not possible, necessary, or desirable within the company’s divestment program, but that this action depends on the necessary approval of the National Congress and a bidding procedure,” wrote the rapporteur minister.