Petrobras Authorized to Sell Oil and Gas Assets Without Bidding Process

Measure Was Determined by the STF Which Maintains Decree Issued During Michel Temer’s Government in 2018 That Enables the Sale of Petrobras Oil and Gas Blocks Without Bidding

Petrobras was granted a measure that could boost its divestment plan. This Friday (05), through a virtual judgment, the Federal Supreme Court (STF) ruled that the state company can now sell its oil and gas blocks by waiving the bidding process. The STF’s decision represents a significant achievement for the Bolsonaro government.

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Decree 9,355, issued during Michel Temer’s government in 2018, established governance rules for the transfer of exploration, development, and production rights for oil and gas by Petrobras.

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The regulation was challenged by the PT (Workers’ Party), arguing that it should be Congress, not the Executive, responsible for legislating on bidding rules for state-owned companies like Petrobras.

For the majority of the ministers, even before the decree was published, it was already estimated that the transfer of exploration and production rights for oil and gas could occur without the need for bidding and that the measure established by Temer was merely a way to simplify the steps of the procedure.

By six votes to four, it was determined that Decree 9,355 is capable of regulating Petrobras’ exploration and production contracts, as well as contracts for goods and services where the state company is the leader in a consortium.

Petrobras’ Divestment Drives Entry of New Oil and Gas Operators in the Espírito Santo Basin

The state of Espírito Santo has been one of the biggest beneficiaries of Petrobras’ divestment plans. The expectation is that the arrival of new companies will generate jobs and income in the region. At the end of last month, Petrobras closed a US$ 155 million deal with Karavan SPE Cricaré, a partnership between Karavan and Seacrest, for participation in 27 E&P areas located in the onshore area of the Espírito Santo basin.

The expectation is that the new operator will seize exploration opportunities in oil and gas fields to increase production. The sale is part of Petrobras’ asset sale program of US$ 20-30 billion for 2020-24. Learn More Here.