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Petrobras Texas Refinery Probe to Be Appealed by Senate

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April 24 (Bloomberg) -- Brazil’s Senate will appeal a Supreme Court order limiting the scope of a congressional inquiry into an oil refinery purchase that resulted in a $530 million loss to state-run Petroleo Brasileiro SA.

Senate chief Renan Calheiros said in an e-mailed statement today that the upper house of Congress will challenge the decision limiting the probe to Petrobras and preventing lawmakers from expanding investigations to opposition parties. Justice Rosa Weber yesterday instructed Congress to install an inquiry dealing exclusively with Petrobras, as the Rio de Janeiro-based oil company is known.

Weber’s decision, which could be overturned by a majority of Supreme Court judges, paves the way for a prolonged political battle and media spotlight on the scandal involving Brazil’s top state-run company just before presidential polls.

The opposition is seeking to investigate Petrobras’s purchase of Pasadena Refining System Inc. from Astra Oil Trading NV, which bought the plant for $42.5 million in 2005, a fraction of the $1.25 billion total that Petrobras paid. Government allies are seeking to include allegations against opposition presidential candidates in the probe.

President Dilma Rousseff, who was then the chairwoman of Petrobras, has said that directors approved the $370 million acquisition of a 50 percent stake in the refinery in 2006 without knowledge of a put option that in 2012 forced the company to buy the rest as part of a $820.5 million legal settlement.

The investigation doesn’t need to include allegations of irregularities involving parties of the two leading opposition candidates facing Rousseff in Oct. 5 elections, Weber said in the decision posted on the court’s website late yesterday.

Petrobras rose 0.4 percent to 16.10 reais at 2:27 p.m. in Sao Paulo. The stock is down 6 percent this year.

Company’s Loss

Petrobras Chief Executive Officer Maria das Gracas Foster said during an April 15 Senate hearing that the acquisition “was not a good deal” and resulted in a $530 million loss for the state-run oil company. Foster said Astra paid at least $360 million for the refinery, including investments it made before selling to Petrobras.

Astra said the success of the refinery purchase surpassed “any reasonable expectation” because rising demand caused by political instability and severe storms boosted refining margins to record highs following the deal.

While surveys show Rousseff would have enough support for a first-round win, her approval ratings are dropping as growth slows and inflation quickens. The negative evaluation of her performance rose to 28 percent from 22 percent, according to a Vox Populi poll released April 17 in the online edition of Carta Capital magazine. Her positive evaluation was 32 percent, compared with 34 percent in February.

Support for opposition Senator Aecio Neves was 16 percent in the Vox Populi poll, compared with 17 percent in the previous poll. Former Pernambuco State Governor Eduardo Campos garnered 8 percent, compared with 6 percent.

To contact the reporter on this story: Raymond Colitt in Brasilia Newsroom at rcolitt@bloomberg.net

To contact the editors responsible for this story: Andre Soliani at asoliani@bloomberg.net; James Attwood at jattwood3@bloomberg.net Carlos Caminada, Stephen Cunningham

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