Petrobras Retains Refineries and Gas Pipeline in CADE’s Landmark Reversal

In a significant reversal, Brazil’s Administrative Council for Economic Defense (CADE) has annulled previously mandated divestment remedies for Petrobras. This unprecedented decision allows the state-owned oil giant to retain five oil refineries and the Transportadora Brasileira Gasoduto Bolívia-Brasil (TBG) gas pipeline operator, which it had been ordered to sell under a 2019 agreement.

The original agreement was part of a broader effort to suspend investigations into Petrobras’s dominance in the refining and gas markets. However, following successful renegotiations, Petrobras has secured more favorable terms. The revised deal, approved by CADE’s tribunal on Wednesday, marks the first time the competition authority has reversed such divestment orders.

Under the new terms, Petrobras is now subject to different obligations. CADE will monitor the methodology Petrobras uses to set oil prices at its refineries for the next three years and oversee renewable energy pricing for an additional three years. In the gas sector, although Petrobras will retain its investment in TBG, it will cede operational control. TBG is now required to appoint independent members to its board of directors to ensure impartial governance.

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Failure to adhere to these stipulations allows CADE to reopen investigations. Any confirmed misconduct could lead to penalties for Petrobras, including fines and enforced changes to its business practices. Meanwhile, ongoing investigations into allegations of price discrimination will be suspended during this monitoring period.

This agreement is the culmination of months of negotiation between Petrobras and CADE, aligning with a leadership transition at Petrobras. Magda Chambriard, newly endorsed by the company’s eligibility committee, is set to take over the presidency. Chambriard’s leadership is expected to focus on expanding Petrobras’s refining operations, signaling a strategic shift for the company amidst this regulatory easing.

Source: Valor International