Petrobras revokes platform maintenance contracts

Brazil's state-controlled Petrobras has revoked two platform maintenance contracts totaling 1.16bn reals ($440mn) with Brazilian firms Iesa Oleo e Gas and MPE, two of the 23 companies Petrobras blacklisted last month because of their alleged involvement in a corruption scheme.

The five-year contracts, signed in 2013, covered maintenance services for 21 platforms in Brazil's Campos basin.

Petrobras says the contracts were cancelled for non-performance, and it plans to re-launch a tender for the contracts as early as this month.

In a sign that local content rules may be relaxed, the company has said it would offer the contracts to international firms if necessary.

On 29 December, Petrobras blocked the 23 companies from bidding on future contracts, but had said existing contracts would not be interrupted.

In November, Brazilian federal police arrested Iesa director Otto Garrido Sparenberg for his alleged role in a major kickback scheme. Shortly afterward, Iesa's precarious financial situation led Petrobras to cancel a $720mn contract with the firm for the construction of 24 gas compression modules. Earlier this week, Petrobras said it had re-launched the tender process for the modules.

Iesa was not available to comment on new contract cancellation, but has previously denied any wrongdoing.

Petrobras says its offshore maintenance demands are currently being met.

In another development related to the corruption case, Petrobras says it intends to approve unaudited third quarter financial results at a 27 January board meeting, and could release delayed unaudited results that same day.

The results had been scheduled for release by a 14 November deadline. Petrobras has repeatedly delayed publishing third quarter financial results while the corruption investigations are underway.

The company's external auditor, PricewaterhouseCoopers, has refused to sign off on results pending the outcome of the probes. Petrobras has not set a date for the release of audited results, but has said it would give the market 15-days´ notice.

Covenants in some of Petrobras' bonds required the company to release unaudited results by 31 December, 90 days after the end of the third quarter. Petrobras has since negotiated an extension with creditors, but must release results by 31 January to avoid accelerated payments.

The delay has interfered with tPetrobras' ability to tap international credit markets, which it usually does in the first half of the year.

Petrobras is expected to record massive write-downs on the book value of some assets allegedly involving overpriced contracts at the heart of the corruption scandal, which is also the target of an investigation by the US securities and exchange commission (SEC).

nw/pg

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