June 12, 2019 / 8:37 PM / 4 days ago

Petrobras expects Brazil Supreme Court approval for governance rules -source

BRASILIA, June 12 (Reuters) - State-controlled oil company Petroleo Brasileiro SA expects Brazil’s Supreme Court to give its blessing on Wednesday to proposed governance rules for the sale of exploration and production (E&P) rights, according to a source with knowledge on the matter.

Petrobras considers a favorable judgment in this case, along with the court’s ruling last week that state-run firms do not need congressional approval to sell off their subsidiaries, as the legal pillars of its divestment plan to reduce its high level of debt, one of the highest in the sector.

Petrobras, as the company is known, says the plan will allow it to focus on offshore exploration and production in its pre-salt area, where billions of barrels of oil are trapped under a thick layer of salt offshore.

Supreme Court justices will deliberate on Wednesday whether the proposed governance rules related to the sale of exploration contracts by the company, which has been challenged by Brazil’s Workers’ Party, should be maintained or repealed.

Like the case involving congressional approval for asset sales, the one addressing exploration contracts involves a competitive procedure to unload assets, the source said.

The court will also rule on whether Petrobras when leading a consortium is obliged to carry out a public auction when acquiring goods or services. (Reporting by Ricardo Brito; Writing by Gabriela Mello Editing by Phil Berlowitz)

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