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Petrobras scraps gas contract of J&F unit over corruption charges

EBR Staff Writer Published 11 June 2017

Brazilian state-run oil company Petróleo Brasileiro (Petrobras) has terminated the natural gas supply contract of Ambar relating to a thermal power plant UTE Mário Covas for breaching anticorruption terms.

Ambar is a unit of the Batista Family owned J&F. The Batista Family has been at the center of a corruption scandal in Brazil, as reported by the Reuters.

The contract was given by Petrobras in mid-April which has a clause that Âmbar stated to have made no payment or offering to seek undue advantage from any public authority.

Petrobras said that it had enforced an early termination of the contract after getting to know of the recordings made during the plea bargain agreements by some of the group executives of J&F. This, the Brazilian oil and gas giant said that those acts are in violation of the anti-corruption legislation in force.

The company stated: “Petrobras shall also exercise the prerogative to collect indemnity for the breach of contractual terms, in the amount of R$70m ($21.4m), considering the remaining contractual term between the effective date of termination, which occurs 10 days after the notification, and its original termination, which would be on December  31, 2017.

“It should be clarified that during contract negotiations, Petrobras did not accept the demand made by Âmbar to ground contractual price on import prices of gas from Bolivia, for such prices are below the conditions set forth in the company’s current pricing policy.”

Petrobras reiterated that the price conditions it had agreed with Ambar for the contract were drawn from market criteria that reflect the contracts it had signed with other clients.

While the current price in the terminated contract is $6.07/MMBtu, the value of Bolivian gas imports is $4.29/MMBtu, stated Petrobras.