Conditions not right for Petrobras asset sales: Lula

State-controlled Petrobras should suspend the sales of its assets as conditions are not favorable for them now, Brazil's President Luiz Inacio Lula da Silva said in his first explicit remarks on the subject since taking office in January.

"We already told the president of Petrobras, comrade Jean Paul [Prates] that it is necessary to suspend the sale of assets," Lula said in a televised interview, adding "the conditions to continue selling are not there."

Following the departure of Lula's Workers Party from power in 2016, Petrobras began divesting from a series of assets, including many smaller, onshore oil fields.

But in a sign that era is over, Brazil's ministry of mining and energy MME asked state-controlled Petrobras in early March to suspend asset sales for 90 days while it reevaluates its national energy policy. The suspension of asset sales is a demand from oil unions, a significant support base for Lula.

Last week Petrobras said the firm had carried out a preliminary study and, so far, had not "found grounds for which the projects for which contracts have already been signed should be suspended."

Signed contracts include the sale of the Lubnor refinery in the northeastern Ceara state to Grepar Participacoes for $34mn, the onshore fields in Rio Grande do Norte state known as the Potiguar hub to 3R Petroleum for $1.38bn as well as the onshore mature fields in Espirito Santo state known as North Pole Capixaba to Seacrest for $544mn.

In response, oil workers union FUP called for a strike on 24 March. The union will use the day of paralysis to hold assemblies to "to evaluate the approval of strikes against any attempt to privatize Petrobras' assets in the Lula government".

FUP criticized the sale of Petrobras' "strategic assets at a bargain price, in suspicious negotiations" during former far-right president Jair Bolsonaro's term. The union pointed to the sale of Petrobras' 330,000 b/d Landulpho Alves refinery (RLAM) months after Bolsonaro allegedly received jewelry gifts worth millions.

Petrobras said other contracts not yet signed will continue to be analyzed. Divestments in the binding phase include assets in Colombia including the Tayrona exploration block and the mature Bahia Terra hub under negotiation with a consortium composed of PetroReconcavao and Eneva.

The sales of TGB, the company that owns and operates the Brazil-Bolivia pipeline, and TSB, which participates in the Parana-Uruguayana pipeline, are also in the binding phase.

By Eléonore Hughes