(Adds detail about companies banned from working with Petrobras)
By Alonso Soto
BRASILIA, Aug 26 (Reuters) - Brazil's government is working on a deal to allow construction companies implicated in a massive corruption scandal to resume doing business with state-run oil company Petrobras in exchange for paying fines and damages, a government official briefed on the matter said on Wednesday.
The official, who asked not to be identified because negotiations are not public, said the government is in talks with federal prosecutors to finalize the deal, which would be implemented through a presidential decree.
The source did not say when the agreement, which could bring in billions of dollars to state coffers, would be concluded.
A spokesman for Brazil's presidency declined to comment.
"This is not part of a plan to salvage the companies or fatten government accounts," said the official. "The objective is for these companies to resume work in exchange for compensation to both Petrobras and the federal government."
Finance Minister Joaquim Levy, however, later told reporters in Brasilia the ministry is not working on a decree that would allow the companies to work for Petrobras again.
"The government is very worried and wants these companies to resume work to give a breather to the economy," said a senior ruling party lawmaker directly involved in the talks for a decree, told Reuters.
He asked not to be named so that he could speak freely about issues considered sensitive by President Dilma Rousseff's ruling Workers' Party.
Late last year, Petroleo Brasileiro SA, as Petrobras is formally known, froze payments to, and ended the right to contract any new business with, nearly two dozen contractors. These companies allegedly rigged bids for Petrobras refineries and other infrastructure projects, overcharged for work and funneled some of the excess to executives and politicians as bribes and political-campaign kickbacks.
Odebrecht SA, Camargo Correa and Andrade Gutierrez, three of the country's largest construction and engineering firms, are on the list which has grown to 26 companies from 24 since December, Petrobras said.
Camargo Correa has agreed to pay 700 million reais ($192 million) in compensation to obtain immunity from further prosecution.
Foreign companies such as SBM Offshore NV, a Netherlands-based firm that is the world's largest leaser of oil-production ships, Italo-Argentine steel group Techint and Japan's Toshiba Corp are also on the list.
The investigation has nearly paralyzed Brazil's oil and gas industry and delayed other infrastructure projects, deepening what is expected to be the country's worst recession in 25 years. In recent years, Petrobras has spent more than $40 billion a year on capital investment.
A deal for those companies to resume work could be a relief for Rousseff as she struggles to contain the economic and political fallout from the kickback investigation, dubbed "Operation Car Wash."
The official said the companies can pay in cash or with assets but added he did not know how much the compensation would amount to. Local newspaper Folha de Sao Paulo reported on Wednesday the government could receive 15 billion reais ($4.12 billion), based on finance ministry estimates.
Five of the companies involved are negotiating separate leniency deals with the Comptroller General's office (CGU), to avoid being banned from bidding for any new government contracts, the CGU said. They are OAS, Galvão Engenharia, Engevix, UTC e SOG Oleo e Gas. ($1 = 3.64 reais) (Additional reporting by Walter Brandimarte in Sao Paulo and Jeb Blount in Rio de Janeiro; Editing by James Dalgleish)