Transparência e Governança

By Sabrina Valle  Jun 26, 2014 12:00 AM GMT-0300

Petroleo Brasileiro SA’s agreement to pay the Brazilian government $6.8 billion over five years for new oil rights was made public before it was presented at a board meeting, according to people briefed on recent meetings.

Not all of the 10 directors were informed before the June 24 announcement, said the people, who asked not to be identified because board matters aren’t made public. The deal to produce as much as 15 billion barrels of crude, almost as much as Brazil’s proven reserves, was decided and announced by the National Energy Policy Council, which is led by the energy minister and includes the finance and planning ministers.

The press departments of Petrobras and the energy ministry didn’t respond to requests for comment.

The episode highlights how some of the most important decisions impacting Petrobras have been made in Brasilia by the government and with little input from the board, weakening corporate governance at the biggest producer in deep waters. Last year board members learned of a fuel price increase through the media, Agencia Estado reported at the time.

In February, five members of the audit committee complained to securities regulator CVM that they were given only a few hours to review hundreds of pages of quarterly results.

The world’s most indebted publicly traded oil company agreed to pay 15 billion reais ($6.8 billion) through 2018 to produce more oil from a region that holds the giant Buzios field. It is considering selling assets and restructuring other projects to help shoulder the cost.

Share Drop

The announcement spurred the biggest share price decline in six weeks and rating cuts by Banco Bradesco SA and UBS AG. The contract -- including a 2 billion-real payment this year and the rest by the end of 2018 -- increases the risk that Petrobras (PBR) will look to sell new shares, Banco BTG Pactual analysts wrote in a note to clients.

Chief Executive Officer Maria das Gracas Foster ruled out a share sale twice during a press conference in Rio de Janeiro this week.

Oil and Gas Secretary Marco Antonio Almeida said June 24 that the deal gives Petrobras a “great” oil area and wasn’t designed to improve the government’s fiscal accounts.

To contact the reporter on this story: Sabrina Valle in Rio de Janeiro at Este endereço de e-mail está protegido contra spambots. Você deve habilitar o JavaScript para visualizá-lo.

To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.netPeter Millard