Directors 'not consulted' on Petrobras deal

Petrobras deal: Independent board members say they were not consulted on 15 billion reais deal

Two members of Petrobras' board of directors say they were not consulted about a major pre-salt production contract with the government announced this week and could file a complaint with financial regulators, reports said.

The state-led oil company said on Tuesday that Brazil's National Energy Policy board had approved to contract with Petrobras to produce additional oil from premier pre-salt reserves in unlicenced acreage off Brazil.

In exchange for those rights Petrobras must make payments to the government totalling 15 billion reais ($6.8 billion) by 2018.

Petrobras was already authorised to pump up to 5 billion barrels under a 2010 government agreement in the Cessao Onerosa area, but that deal was financed by issuing new shares to allot government participation.

Union representative Silvio Sinedino and minority shareholder representative Mauro Cunha told the Folha de Sao Paulo newspaper that they only learned of the deal on publication of a securities filing and indicated the contract was not submitted to the board for consideration before being announced late Tuesday.

Senedino told Folha that he "felt uncomfortable" regarding the process, which he believes violated Petrobras' bylaws.

"This type of business demands consultation," he told the newspaper.

The board member told Reuters that he may consider filing a complaint with Brazil's securities regulator.

Petrobras did not respond to Folha's request for comment.

The men are two of three independent members of Petrobras' board, while the remainder are government-linked. The chairmanship of the board falls to the national finance minister.

Senedino said he would not necessarily have opposed the deal, but said he believed the timetable of the government payments should have been discussed as production from the area is not forseen to start until 2021.

Petrobras already has a five-year $220.6 billion investment that has left it with little spare cash and a very full plate of projects.

Criics have also noted the cash payments come at a handy time for the national government which has been under budget pressure.

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