Brazil issues injunction suspending divestments of Petrobras units

Brazilian Supreme Court has issued an injunction that suspends some major divestments by state-run oil firm Petroleo Brasileiro.

The Supreme Court’s decision will suspend the sale of Petrobras’ TAG pipeline unit and eight refineries. The suspension also includes the sale of its Araucaria Nitrogenous fertiliser business, reported Reuters.

It is expected that the sale of these eight refineries would generate $15bn.

There is no clarity yet on how the present ruling would impact  Petrobras, especially as it has agreed to sell TAG to a consortium led by French energy firm Engie for $8.6bn in April and also secured regulatory approval.

The sale is part of the Brazilian firm’s disinvestment programme to reduce debt.

Petrobras stated that it will review this decision and take action to protect its interests, as well as of the investors.

In response to a lawsuit filed by the employees union against planned divestment of refineries, the ruling stated the sale will have to be undertaken in an auction format with Congressional approval.

The oil employees union, Sindipetro Unificado-SP, welcomed the decision.

Meanwhile, Petrobas stated that it is shipping crude to China over the next two months to quickly meet the demand.

The firm has leased storage tanks in Qingdao port city.

This storage facility will enable it to sell crude in smaller quantities to meet the demand of Chinese refiners, the company told Reuters in an email.

The initial shipments of Lula and Buzios crude are expected to arrive in China at the end of next month and early July.