Court upholds decision against Parente's street fair.

247 - The courts have denied Petrobras' appeal and upheld a decision against the fire sale that Pedro Parente, the state-owned company's president, has been promoting with the sale of company assets. The oil company has already sold R$ 13 billion in assets since Parente took over, but refuses to explain how the companies were valued.read more here).

Read more in the Reuters and Sputnik Brazil reports on this topic:

Court upholds suspension of sale of BR Distribuidora by Petrobras.

By Marta Nogueira

RIO DE JANEIRO (Reuters) - A court has denied an appeal by Petrobras and upheld the suspension of the oil company's moves to sell a stake in its fuel distribution subsidiary, BR Distribuidora, which constitutes a significant part of the company's multi-billion dollar divestment plan for 2017 and 2018.

The decision was unanimously reached by the first panel of the Federal Regional Court of the 5th Region on Monday, marking another victory for the Alagoas-Sergipe Oil Workers Union (Sindipetro-AL/SE), which has filed several lawsuits against the sale of the company's assets.

The sale process of BR was suspended following a decision by the 3rd Court of the Judicial Section of Sergipe, which in December granted an injunction in response to a popular action filed by Sindipetro-AL/SE, affiliated with the National Federation of Petroleum Workers (FNP), which questions the sale of the asset without bidding.

BR is considered one of the most valuable assets offered by Petrobras and, if sold, should contribute a significant amount to the divestment target for the 2017-2018 biennium, which totals 21 billion dollars.

In the BR sale model presented by Petrobras, there will be a corporate structure involving both common and preferred shares, such that Petrobras will retain a majority stake in the total capital, but with a 49 percent share of the voting capital.

When contacted, Petrobras did not immediately respond to a request for comment.

UNION MOVEMENTS

The Sindipetro AL/SE union has already filed a total of seven lawsuits against the sale of Petrobras assets and is considering further actions.

The lawsuits were cited by the oil company as the reason for not meeting its divestment target for the 2015-2016 period, when it sold $13,6 billion worth of assets, compared to the company's forecast of $15,1 billion.

The lawyer responsible for the lawsuits, Raquel de Oliveira Sousa, explained that the union's main motivation is the preservation of public assets.

"The sale of these assets is immensely damaging to the country... Petrobras is using all available resources to try to overturn these injunctions... just as we have also been making every effort to maintain them," stated Raquel.

The lawyer also assessed that the sales announced by Petrobras are being carried out at prices unfavorable to the company.

Earlier on Tuesday, the state-owned company reported that the Federal Court had suspended the sale of Petroquímica Suape and Companhia Integrada Têxtil de Pernambuco (Citepe).

On December 28, the company reported that its Board of Directors had approved a contract to sell these two assets to Grupo Petrotemex and Dak Americas Exterior, subsidiaries of Alpek, for $385 million.

Oil workers devise strategies to block the sale of Petrobras assets.

Sputnik Brazil - Petrobras began an extraordinary general meeting this Tuesday, the 31st, to discuss the sale of large subsidiary companies as part of a plan that foresees a 25% cut in investments between 2017 and 2021. The plan includes the sale of US$19,5 billion in assets and a reduction in leverage (the ratio between debt and cash generation).

This ratio should be lowered from the current 4,49 times to 2,5, a level considered ideal by risk assessment agencies. According to the company's new management, headed by Pedro Parente, projected expenses are US$74,1 billion from 2017 to 2021, and the majority of the cuts (81%) are planned for the exploration and production (E&P) area.

In response to a request from Sputnik Brasil, the state-owned company reported that in 2015 its asset divestment program totaled US$678 million, including the sale of its stake in the Southern Basin (US$480 million), Gaspetro (US$97 million), and portfolio adjustments (US$97 million). With the divestments carried out in 2016, the total reaches US$13,6 billion.

The sale of assets and stakes, however, has been marked by several legal challenges, often filed by representative entities of oil workers and engineers. In the first week of December, for example, the Federal Court of Accounts (TCU) approved a precautionary measure prohibiting the company from signing new asset sale contracts until the Court analyzes the divestment procedures. The measure only allows the continued demobilization of five projects that were in their final stages: Paraty 1, Paraty 3, Ópera, Portfólio 1, and Sabará.

According to José Maria Rangel, general coordinator of the Unified Federation of Oil Workers (FUP), the asset sale program is no surprise.

"Back in the late 90s, when this same group was in charge of Petrobras during Fernando Henrique Cardoso's government, they were also eager to hand over public assets, because that's the only way they know how to govern. Obviously, these asset sales and purchases are commonplace, but we can't lose sight of the fact that the oil and gas sector worldwide is undergoing a process of readjustment, mainly due to the brutal drop in the price of a barrel of oil," the executive observes.

According to FUP, this readjustment has led all operators to put around US$1 trillion in assets on the market, causing prices to plummet.

"Petrobras has been putting important assets up for sale, which jeopardizes one of Petrobras' fundamental characteristics: being an integrated oil company. This has caused us great concern. We are currently meeting with our Deliberative Council, where we will develop strategies to not only challenge our position within the industry but also within society, to demonstrate that the company's current administration is dismantling Petrobras. The speed at which they are doing this is remarkable," states the federation's general coordinator.

Rangel points out that there are a number of sales that Petrobras made that are still being contested in court.

"Not only the TCU's decision, but also in a recent decision regarding the sale of assets in Pernambuco, the judge himself stated that what Petrobras is doing is inappropriate because the price being offered is quite low. The federation advocates that Petrobras not sell any of its assets in the country and that it invest here, because we understand that it is different from other operators—it has an important role to play, which is to develop our country, generate employment, income, and, above all, maintain the development of our people's engineering skills."

Also within the scope of the Justice system, the Federal Regional Court of the 5th Region upheld, this Tuesday, the suspension of the sale of Petrobras' stake in BR Distribuidora. In December, a lawsuit filed by the Alagoas/Sergipe Oil Workers Union questioned the reasons for making the offer without a bidding process.