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Memorandum |  Infrastructure: TCU’s decision on Petrobras’ Divestment Plan

Oil and Gas
The Brazilian Federal Accounts Board (Tribunal de Contas da União) (“TCU”) has recently issued its decision regarding Petrobras’ divestment program, following the investigation procedure commenced when the TCU‘s Oil, Natural Gas and Mining Infrastructure Secretary (Secretaria de Fiscalização de Infraestrutura de Petróleo, Gás Natural e Mineração) made a representation to the TCU arguing that Petrobras’ divestment transactions failed to comply with Brazilian law and lacked transparency. Please find below a short summary of the main guidelines that Petrobras will have to observe as per TCU’s decision:

1. The TCU revoked the temporary suspension of the divestment program, and agreed with the new internal rules proposed by Petrobras for the divestment program, with the following changes:


  • Publishing notice to the market describing each divestment opportunity (teaser), so that no intended sale will be confidential;

  • Publishing notice to the market informing as to: (i) the beginning of the non-binding offer phase; (ii) the beginning of the binding offer phase; (iii) the beginning of the exclusive negotiation phase; (iv) internal approval by Petrobras’ Executive Board, Board of Directors and Extraordinary Shareholders’ Meeting; and (v) closing of the transaction.

Potential Bidders

  • The Executive Board must approve the objective criteria to be used for inviting and qualifying potential bidders;

  • Any qualified bidder must be allowed to participate in any given sale, prohibiting Petrobras from “cherry-picking” proposed bidders;

  • Ensuring that each sale will strictly abide by the rules of the relevant tender documents, thereby giving equal negotiating opportunity for each qualified bidder.

Changes to the Divestment Opportunity

  • The bid procedure must restart if the divested asset is in any way changed;

  • The binding offer phase must be repeated if the Executive Board approves changes to the scope of any given sale;

  • A new binding offer phase must be carried out if the difference between the best offer and any other offer is less than 10%.

Executive Board Approval of Divestment

  • The Executive Board must now approve: (i) the inclusion of assets in the divestment plan; (ii) the structure of the deal; (iii) the criteria for inviting and qualifying bidders; (iv) the list of potential bidders; (v) the classification of nonbinding offers received; (vi) the classification of the binding offers received; (vii) exclusive negotiations with a certain bidder, if applicable; and (viii) the execution of agreements.

Choice of Financial Advisor

  • Petrobras must use specialized M&A rankings for selecting its financial advisors, and favor the use of different advisors;

  • Direct contracting of financial advisors shall be the exception, and a legal opinion supporting such decision shall be necessary.

Virtual Data Room/ Q&A

  • Disclosing to all qualified bidders all clarifications requested during each relevant sale process;

  • The exception is when such information can negatively affect the value of the asset.

2. Petrobras must cancel and restart any intended sales that have not yet been signed (with the exception of the Portfólio 1 and Ópera projects), by following the recommended revised bidding rules.

Petrobras requested TCU to approve the continuation of 10 sales that were in the final stages of negotiation, namely Portfólio 1, Ópera, Lobato, Ártico, Topázio, Coral 2, Coral 3, Mangalarga 2, Jade and Cruzeiro. However, the TCU has only approved the continuation of Portfólio 1 and Ópera, which must follow the new procedure for the upcoming phases. Therefore, Petrobras must restart these other projects (along with the other 43 projects to be divested), and follow the new internal rules as reviewed by the TCU.

TCU’s view is that Law 13,303/2016 (sets the rules for government-owned companies) applies to the divestment program. Therefore, as this law revoked Article 67 of Law 9,478/1997 (the Petroleum Law), which was used as the legal basis for Decree 2,745/1998 (the former Petrobras’ simplified bidding procedures), cases involving the applicability of this Decree will become irrelevant.

Finally, TCU also ruled that Petrobras’ divestment is not subject to legislative approval, and it is not subject, at the moment, to the national divestment plan, as defined by Law 9,491/1997.

The TCU decision, in Portuguese, can be accessed by clicking here.

For additional information, please contact:

Bruno Werneck
T +55 11 3147-2584

Fabiano Luz de Brito
T +55 11 3147-7726

Giovani Loss
T +55 21 3231-8246

Pablo Sorj
T +55 21 3231-8241

Thiago Fernandes Moreira 
T +55 21 3231 8115
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