Petrobras’ asset sale to Karoon still on hold

Petrobras’ sale of Baúna and Tartaruga Verde assets, offshore Brazil, to Karoon is still on hold following the court’s rejection of the Brazilian company’s appeal.

Petrobras and Karoon started negotiating the sale of an operated 100% interest in the Baúna oil project and a non‐operated 50% interest in the Tartaruga Verde oil development in October this year as part of Petrobras’ plan to divest approximately $35 billion of assets between 2015‐2018 to reduce debt.

However, on October 25, 2016, court proceedings were initiated in the Federal Court of Sergipe by José Hunaldo Nunes Santos against Petrobras, the Brazilian oil and gas regulator Agência Nacional do Petróleo, Gás Natural e Biocombustíveis (ANP) and Karoon alleging that the correct sale procedure was not followed.

On November 19, 2016, an injunction was granted suspending the potential sale of the Baúna oil project and an interest in the Tartaruga Verde oil development. Petrobras filed an appeal against the injunction on November 21, 2016.

Karoon reported on Tuesday it has been advised that the Federal Court of Sergipe has rejected Petrobras’ appeal to lift the injunction. The sales process relating to the Baúna and Tartaruga oil projects remains suspended. The court has now entered a recess period until January 20, 2017.

Karoon is required to file its defense in respect of the main court proceedings during February 2017. The company said it is currently taking advice regarding this, any decision will likely be made in the new year.

Petrobras disputes the allegations and has announced the sales process was conducted in compliance with the stages laid down in Petrobras’ Divestment System, which in turn complies with the simplified bidding mechanism outlined in Decree No. 2745/1998, and guaranteed extensive competition among potential interested parties, as a means of ensuring the best deal for the company.

Karoon recently stated it remained committed to buying the assets from Petrobras.

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