Petrobras, Brazil’s mightily troubled state oil firm, recently tried and failed in a bit to go to arbitration to re-do a contract with Sete Brasil, the oil rig chartering firm that Petrobras itself helped to create, according to Reuters.
The arbitration proposal, which suggested each party appoint three mediators to re-work the contract, was flatly rejected by Sete Brasil’s main partners. Petrobras is Sete Brasil’s only customer and holds a 5% stake in the firm.
Sete Brasil has been in trouble ever since the vast “Operation Car Wash” corruption scandal erupted around Petrobras. The preference among Sete Brasil’s shareholders appears to be to seek bankruptcy protection.
The Petrobras bribes-for-inflated-contracts scandal has seen executives and politicians shamed and charged – some convicted and jailed – and has caused ructions in Brazil’s economy and political sphere.
Sete Brasil was founded in 2010 by Petrobras, some banks and some pension funds. It was originally contracted to build 29 offshore rigs for leasing to Petrobras.
But since the corruption scandal erupted, the number of rigs was scaled back drastically and Sete Brasil’s future became precarious.
In February Petrobras proposed revising the contract to 10 rigs over a five-year spell but it would not have been enough to ensure Sete Brasil’s survival.
Petrobras is expected to come up with a new revised contract proposal in a few weeks.
