Petróleo Brasileiro S.A. — Petrobras

DIEESE estimates a reduction of R$172,214.52 million (nominal) in planned investments from 2014 to 2017: R$104,321.71 million from Petrobras and R$67,892.81 million from civil construction.

Source: Implicações econômicas intersetoriais da Operação Lava Jato — DIEESE, Mar. 16, 2021 · slide 6, table 'Reduction of planned investments - Petrobras and Civil Construction' · open original ↗

Per year, the estimated reduction is R$9,482.41 million in 2014, R$41,834.77 million in 2015, R$56,942.63 million in 2016 and R$63,954.71 million in 2017. Petrobras: R$25,997.49 million (2015), R$35,656.07 million (2016) and R$42,668.15 million (2017). Civil construction: R$9,482.41 million (2014), R$15,837.28 million (2015), R$21,286.56 million (2016) and R$21,286.56 million (2017).

Source: Implicações econômicas intersetoriais da Operação Lava Jato — DIEESE, Mar. 16, 2021 · slide 6, table · open original ↗

The Petrobras part is the difference between investment actually made and investment projected for 2015–2017 by multiple linear regression, in which investment depends on net revenue, the Brent oil price and the company's net profit (annualized quarterly data, in US$ million). The slide calls the difference investments canceled 'as a result of the way Lava Jato was carried out, without preserving the productive and services structure.'

Source: Implicações econômicas intersetoriais da Operação Lava Jato — DIEESE, Mar. 16, 2021 · slide 5, chart and side text · open original ↗

Petrobras wrote off R$6,194 million of costs capitalized in property, plant and equipment, recognized in the 3rd quarter of 2014, as an estimate of the amounts overpaid in the scheme uncovered by Lava Jato.

Source: Fourth Quarter of 2014 Results (Form 6-K, abril de 2015) — Petrobras (filed with the SEC), Apr. 22, 2015 · p. 1 and section 'Note about Lava Jato Operation' · open original ↗

Write-off method: Petrobras identified the contracts signed from 2004 to April 2012 with 27 companies named in testimony (R$199,610 million), applied 3% (R$5,988 million), added R$150 million of payments outside the cartel, deducted R$346 million of depreciation reversal and added R$402 million of tax credits written off: total of R$6,194 million.

Source: Fourth Quarter of 2014 Results (Form 6-K, abril de 2015) — Petrobras (filed with the SEC), Apr. 22, 2015 · section 'Note about Lava Jato Operation', steps 1 to 5 and table 'Write-off – overpayments incorrectly capitalized' · open original ↗

Petrobras stated that the methodology produces the best estimate and that the amount represents the upper limit of the range of reasonable estimates.

Source: Fourth Quarter of 2014 Results (Form 6-K, abril de 2015) — Petrobras (filed with the SEC), Apr. 22, 2015 · section 'Note about Lava Jato Operation' · open original ↗

In 2014 Petrobras recorded a loss attributable to shareholders of R$21,587 million, resulting mainly from impairment losses (reduction to recoverable value) of R$44,636 million in the year.

Source: Fourth Quarter of 2014 Results (Form 6-K, abril de 2015) — Petrobras (filed with the SEC), Apr. 22, 2015 · p. 1 and p. 7 · open original ↗

Of the R$44,345 million pre-tax impairment in the 4th quarter of 2014, R$30,976 million was in refineries (second train of RNEST and Comperj), R$10,002 million in exploration and production, attributed to the fall in the oil price, and R$2,978 million in petrochemicals, due to lower demand and margins.

Source: Fourth Quarter of 2014 Results (Form 6-K, abril de 2015) — Petrobras (filed with the SEC), Apr. 22, 2015 · p. 2, 'Key events' · open original ↗

For the refineries, Petrobras attributed the postponement of RNEST and Comperj to cash preservation measures and to the implications of Lava Jato for its suppliers, and attributed the losses mainly to project planning deficiencies, the higher discount rate, the delay in cash inflows and the lower growth projection.

Source: Fourth Quarter of 2014 Results (Form 6-K, abril de 2015) — Petrobras (filed with the SEC), Apr. 22, 2015 · p. 2, 'Key events', item i · open original ↗

Petrobras tested using the difference between fair value and book value of assets as a measure of improper payments and gave up: it concluded that this difference was much larger than any reasonable estimate of bribes and came mostly from other causes, such as exchange rate, discount rate, prices, local content and planning deficiencies.

Source: Fourth Quarter of 2014 Results (Form 6-K, abril de 2015) — Petrobras (filed with the SEC), Apr. 22, 2015 · section 'Note about Lava Jato Operation', 'Background' · open original ↗

In the liquidity section, Petrobras reported that, without access to the capital markets and with expected revenue lower because of the fall in oil prices and the devaluation of the real, it decided to postpone projects affected by contractor insolvency or lack of qualified suppliers, 'mainly as a result' of Lava Jato.

Source: Fourth Quarter of 2014 Results (Form 6-K, abril de 2015) — Petrobras (filed with the SEC), Apr. 22, 2015 · section 'Liquidity and Capital Resources' · open original ↗

In April 2015, Petrobras stated that it had not yet recovered any amounts and that any recoveries would be recorded as revenue when received.

Source: Fourth Quarter of 2014 Results (Form 6-K, abril de 2015) — Petrobras (filed with the SEC), Apr. 22, 2015 · section 'Note about Lava Jato Operation' · open original ↗

GO Associados estimated, in August 2015, a direct and indirect impact of about R$143 billion (approximately 2.5% of GDP) on 2015 economic activity, in a scenario of a 37% cut in Petrobras investments (2015–2019 plan) and a 30% drop in disbursements by the investigated contractors.

Source: Efeitos da Lava Jato podem eliminar 1,9 milhão de empregos, diz consultoria — Gazeta do Povo, Aug. 12, 2015 · News report of August 12, 2015, opening paragraphs and assumptions box (the GO study was not opened) · open original ↗

In April 2015, GO Associados, together with FGV, had estimated a loss of R$87 billion to the economy and a cut of about 1 million jobs, based on a 20% drop in Petrobras investments.

Source: Efeitos da Lava Jato podem eliminar 1,9 milhão de empregos, diz consultoria — Gazeta do Povo, Aug. 12, 2015 · News report of August 12, 2015, section 'Scenarios' (earlier estimate) · open original ↗

Tendências Consultoria estimated, in December 2015, that Lava Jato was subtracting about 2.5 percentage points from 2015 GDP; without its effects, the contraction would be approximately 0.7% to 1.3%, according to economist Alessandra Ribeiro, rather than 3.2% (the consultancy's projection at the time).

Source: Lava Jato e a recessão (BBC Brasil, reproduzida pelo IHU-Unisinos) — BBC Brasil / IHU-Unisinos, Dec. 2, 2015 · BBC Brasil report of December 2, 2015, paragraphs on Tendências · open original ↗

The SPE/MF estimated (October 21, 2015) that Petrobras's investment equals about 1.8% of GDP; the 33% reduction in 2015 (from US$37.1 bn to US$25 bn) would take 0.6 point off GDP directly and, with a multiplier of 2.5 (direct, indirect and income effect, input-output matrix cited from FGV), about US$30 billion or 1.7% of GDP.

Source: Impactos da redução dos investimentos do setor de óleo e gás no PIB — Secretariat of Economic Policy of the Ministry of Finance (SPE/MF); the file name also indicates the MME, Oct. 21, 2015 · Sections 2, 3.1 and 3.2, pp. 3–5 (Table 1, p. 4) · open original ↗

The SPE/MF document says that the change in commodity prices, including oil, is one of the main factors of impact on growth since 2014, 'especially in 2015,' and that, in the oil and gas chain, 'other factors, of a non-economic nature' also played a preponderant role in the behavior of the sector's main company.

Source: Impactos da redução dos investimentos do setor de óleo e gás no PIB — Secretariat of Economic Policy of the Ministry of Finance (SPE/MF); the file name also indicates the MME, Oct. 21, 2015 · Section 1, p. 1 · open original ↗

Chapter 2 of the Wilson Center book (2020) describes that the task force concluded that two Petrobras directors and the PT treasurer agreed on bribes equivalent to 0.9% of the contracts brokered by Sete Brasil, with prices 11% to 24% above similar bids, and that Sete Brasil officially acknowledged bribes of US$224 million; the budget for the rigs was estimated at between US$22 and US$25 billion.

Source: Lessons of Operation Car Wash: A legal, institutional, and economic analysis (cap. 2, Costa, Lima e Goldschmidt) — Brazil Institute, Wilson Center (eds. Fabio Ramazzini Bechara and Paulo C. Goldschmidt; hosted by FGV Direito SP), Nov. 2020 · Ch. 2, section on Sete Brasil, pp. 42–43 · open original ↗

The same chapter states that corruption at Petrobras and its suppliers, aggravated by the fall in oil prices in 2015, led Sete Brasil to file for judicial reorganization at the end of April 2016, with debt estimated at about US$5 billion, two-thirds owed to the federal government through public banks and funds (Banco do Brasil US$1 billion; Shipbuilding Guarantee Fund US$1.3 billion; FI-FGTS US$0.7 billion; Caixa US$0.5 billion); in April 2016, the degree of completion of the contracts ranged from 4.78% to 89.96% per rig (Table 7).

Source: Lessons of Operation Car Wash: A legal, institutional, and economic analysis (cap. 2, Costa, Lima e Goldschmidt) — Brazil Institute, Wilson Center (eds. Fabio Ramazzini Bechara and Paulo C. Goldschmidt; hosted by FGV Direito SP), Nov. 2020 · Ch. 2, pp. 42–44 (Table 7) · open original ↗

The authors of chapter 2 write that without asset write-downs (impairments) Petrobras would not have posted a negative result between 2014 and 2018, that the reasons the company stated for the write-downs in the E&P area (fall in oil prices, exchange rate, discount rate, idle rigs, uncertainties in ship construction, decommissioning of platforms) are adequate, and that it will never be known how much of the write-downs is attributable to corruption, to poor management decisions, or to market conditions.

Source: Lessons of Operation Car Wash: A legal, institutional, and economic analysis (cap. 2, Costa, Lima e Goldschmidt) — Brazil Institute, Wilson Center (eds. Fabio Ramazzini Bechara and Paulo C. Goldschmidt; hosted by FGV Direito SP), Nov. 2020 · Ch. 2, p. 44 and concluding section on Petrobras's results · open original ↗

Estadão Conteúdo (August 10, 2016) recorded, with Sinaval data, a drop from more than 82 thousand employees at the end of 2014 to 43 thousand in June 2016 (a loss of about 38 thousand), and attributed the crisis not only to the scandal detailed by Lava Jato but also to the international situation: fall in oil prices, lower world demand and global idle capacity (shipyard capacity utilization fell from 85% in 2008 to 56% in 2014, OECD data); it also recorded Transpetro's cancellation of an order for 17 ships and signs that Petrobras could cancel the last two hulls in Rio Grande.

Source: Em dois anos, indústria naval corta 38 mil empregados — Gazeta do Povo (Estadão Conteúdo), Aug. 10, 2016 · News report of August 10, 2016 · open original ↗

In the Brasil de Fato report, former Petrobras president Sergio Gabrielli said the reduction in the state company's investments hit the offshore industry and Lava Jato affected the supplier chain and created credit problems for the shipyards; professor Armando Boito (Unicamp) stated that the operation made leniency agreements harder by punishing directors in a way that harmed the companies; the article records that the barrel fell from US$80–100 until mid-2012 to US$25–32 in 2016.

Source: Queda no barril do petróleo, corrupção e Lava Jato desmantelam indústria naval — Brasil de Fato, Jan. 5, 2017 · News report of January 5, 2017, causes sections · open original ↗

On December 20, 2019, Petrobras approved the final terms of an agreement with Sete Brasil: charter and operation contracts for 4 rigs were kept for 10 years at US$299 thousand per day, and the contracts for the other 24 were terminated (Sete Brasil was to build 28 rigs for the pre-salt); Petrobras would leave the group's ownership structure.

Source: Petrobras aprova acordo com Sete Brasil que cancela contratos de 24 sondas — Exame, Dec. 20, 2019 · News report of December 20, 2019 · open original ↗

According to Movimento Econômico (February 28, 2024), Sete Brasil owed about R$17 billion to Brazilian shipyards, Petrobras, and the Shipbuilding Guarantee Fund; in 2019 the CGU recorded liabilities of R$17.4 billion with a low probability of recovery; Petrobras recognized a loss of R$5.6 billion in 2016; the FGCN contributed R$6.3 billion and the FI-FGTS R$2.5 billion; Atlântico Sul, Enseada, and Rio Grande suspended contracts after payments ended.

Source: Sete Brasil: pedido de falência e dívida de R$ 17 bi — Movimento Econômico, Feb. 28, 2024 · News report of February 28, 2024 · open original ↗

Galvão Engenharia and Galvão Participações filed for judicial reorganization on March 25, 2015, in the Rio de Janeiro courts; the report does not give the total amount of debt; the company cited as causes Petrobras's suspension of payments in 2014, the downgrade of its risk rating and the end of credit after the arrests of construction company executives in November 2014, the lack of a BNDES bridge loan for the BR-153, and reported having closed the industrial engineering division and cut about 9 thousand jobs in 2015.

Source: Galvão Engenharia, envolvida na Lava Jato, pede recuperação judicial — Tribuna PR, Mar. 26, 2015 · News report of March 26, 2015 · open original ↗

On November 28, 2018, InfoMoney reported that Constellation, an oil and gas company of the Queiroz Galvão group (family-owned, 74%), was preparing a judicial reorganization filing with debt of US$1.7 billion, attributing the loss of cash to the Lava Jato investigations and the fall in oil prices, which led Petrobras to cut spending on renewing rig leases; seven of its eight rigs would be idle.

Source: Empresa de óleo e gás da Queiroz Galvão prepara recuperação judicial — InfoMoney, Nov. 28, 2018 · News report of November 28, 2018 · open original ↗

Paula and Moura (2019) point out that Petrobras's investment fell from about US$48.8 billion in 2013 to US$15.1 billion in 2017 (from 1.97% to 0.73% of GDP) and that formal employment in the Petrobras System went from 86,108 to 68,829 between 2013 and 2016, and that of outsourced workers from 360,180 to 117,555, a 'loss of almost 260 thousand jobs'.

Source: Consequências econômicas da Operação Lava-Jato (artigo de opinião) — Valor Econômico (copy hosted at bresserpereira.org.br), Aug. 28, 2019 · Full text, section on oil and gas · open original ↗

Petrobras wrote off R$6.194 billion in capitalized costs that, according to the company, represented overpayments to suppliers through a payment scheme uncovered by Lava Jato; recognized in 3Q14.

Source: Petrobras — Relatório de desempenho 4T14 (6-K, reapresentação com demonstrações revisadas) — Petrobras, Apr. 2015 · p. 1 (Key events) and p. 3 ("The Lava Jato (Car Wash) Operation and its effects on the Company") · open original ↗

Methodology: contracts with the companies named in testimony, signed between 2004 and April 2012 (R$199.610 billion); the 3% indicated in the testimony was applied (R$5.988 billion), plus R$150 million in payments outside the cartel (R$6.138 billion), minus R$346 million from a depreciation reversal and plus R$402 million from the write-off of tax credits, arriving at R$6.194 billion.

Source: Petrobras — Relatório de desempenho 4T14 (6-K, reapresentação com demonstrações revisadas) — Petrobras, Apr. 2015 · pp. 3–4, steps 1 to 5 and table "Consolidated Write-off – overpayments incorrectly capitalized" · open original ↗

Petrobras recorded R$44.636 billion in impairment losses in 2014 and attributed the net loss of R$21.587 billion to those losses.

Source: Petrobras — Relatório de desempenho 4T14 (6-K, reapresentação com demonstrações revisadas) — Petrobras, Apr. 2015 · p. 1, opening paragraph and "Key events" box · open original ↗

In 4Q14, R$30.976 billion (R$30,976 million in the original) of the impairment (before taxes) related to domestic refineries, after individually testing the second unit of RNEST and Comperj; Petrobras attributed the loss to the prolonged postponement of the projects, resulting from cash preservation measures and the implications of Lava Jato for its suppliers, and to project planning deficiencies, a higher discount rate, and delays in cash inflows.

Source: Petrobras — Relatório de desempenho 4T14 (6-K, reapresentação com demonstrações revisadas) — Petrobras, Apr. 2015 · p. 1, "Key events" box, item i) · open original ↗

PF expert report (completed October 26, 2015, attached to the inquiry on Odebrecht) estimated that improper payments by Petrobras to 27 companies, in 2004–2014, could reach R$42 billion, on a base of R$215.67 billion in payments, with a range from 3% (minimum) to 20% (maximum "conservatively considered").

Source: Novo laudo aponta R$ 42 bilhões de rombo na Petrobras — Tribuna PR (Estadão), Nov. 12, 2015 · body of the report (Estadão), November 12, 2015 · open original ↗

MPF tally released in January 2015: those investigated diverted R$2.1 billion from Petrobras, in overpriced RNEST contracts (2009–2014); R$450 million recovered and R$200 million in assets frozen; 12 plea agreements; 150 individuals and 232 companies investigated.

Source: Desvios na Petrobras chegaram a R$ 2,1 bilhões, estima MPF — Agência Brasil, Jan. 29, 2015 · body of the report (Agência Brasil, January 29, 2015) · open original ↗

On August 17, 2016, the TCU (Ruling 2109/2016-Plenary, case 000.168/2016-5) provisionally ordered the unavailability of assets of responsible parties, including companies (OAS and Grupo Odebrecht), and reported damage to the treasury of R$2.1 billion "so far", which could be greater if the contract amendments are analyzed.

Source: TCU decreta indisponibilidade de bens de responsáveis da Petrobras e de empresas envolvidas (Acórdão 2109/2016-Plenário) — Federal Court of Accounts (TCU), Aug. 18, 2016 · text of the TCU news item, August 18, 2016 · open original ↗

According to Folhapress (February 6, 2018), the TCU estimates that the loss from overpricing in the contracts investigated by Lava Jato exceeds R$29 billion at Petrobras alone; the methodology could still change and the contractors resisted acknowledging the damage.

Source: Empreiteiras podem pagar mais por desvios em obras da Lava Jato — Folha de Pernambuco (Folhapress), Feb. 6, 2018 · body of the report · open original ↗

In an improbity action (Torre Pituba), the unavailability of assets of 18 defendants, "more than R$400 million", and more than R$18 million of the PT (party fund preserved) was ordered; the freeze stands until the total is located.

Source: Réus da Operação Lava Jato têm mais de R$ 400 milhões em bens bloqueados — TRF4, Apr. 2, 2020 · text of the TRF4 news item, April 2, 2020 (decision of the 1st Federal Court of Curitiba) · open original ↗

The TCU ordered the unavailability of R$7.57 billion from 13 contractors, executives, shareholders, and former Petrobras officials, on a preventive basis, to ensure reimbursement to the state-owned company.

Source: TCU bloqueia até R$ 7,5 bilhões na Lava Jato — Tribuna PR, Oct. 2, 2017 · body of the report, October 2, 2017 · open original ↗

Tally of the Curitiba task force (October 2019): R$14.3 billion provided for in leniency agreements, cooperation agreements, TACs, and waivers; R$4,069,514,758.69 returned, an amount that includes R$570 million allocated to reduce tolls in Paraná (R$220 million Ecorodovias and R$350 million Rodonorte), R$3,023,990,764.92 to Petrobras, R$416,523,412.77 to the Union, and R$59 million to the 11th Court of Goiás (the sum of the components differs from the total by R$581); claim for reimbursement of R$18.3 billion in 10 improbity actions.

Source: Lava Jato já devolveu R$ 4 bi e impôs penas que somam 2.249 anos de prisão — Jornal de Brasília (Estadão Conteúdo), Dec. 2, 2019 · body of the report (Estadão Conteúdo, December 2, 2019) · open original ↗

DOJ (September 27, 2018): Petrobras agreed to pay US$853.2 million, under a non-prosecution agreement, to resolve an FCPA investigation; the United States will credit amounts paid to the SEC and to Brazil, with the DOJ and SEC each receiving 10% (US$85.32 million each) and Brazil 80% (US$682.56 million). A 25% discount off the bottom of the sentencing guidelines range was applied.

Source: Petrobras Agrees to Pay More Than $850 Million for FCPA Violations (comunicado do Departamento de Justiça dos EUA) — U.S. Department of Justice, Sept. 27, 2018 · pages 1–2 of the statement · open original ↗

On January 3, 2018, Petrobras announced an agreement in principle to pay US$2.95 billion (two installments of US$983 million and a final one of US$984 million) to end the class action in the US; total amount recognized in 4Q2017; without admission of wrongdoing.

Source: Petrobras — Prospectus Supplement (424B2), seção Recent Developments, p. S-15 — Petrobras (SEC), Jan. 2018 · p. S-15, "Recent Developments" · open original ↗