Petrobras ends rig contract with Ensco over bribe allegations

SAO PAULO (Reuters) - Brazil’s state-run oil producer Petrobras ended a drill ship contract with rig contractor Ensco Plc because of corruption allegations, Ensco said, as fallout from the country’s largest-ever graft investigation spreads. Ensco received a notice from Petrobras on Monday saying the oil company believed the contract was void, Ensco said in a U.S. Securities and Exchange Commission filing dated Jan. 5.

The logo of Brazil's state-run Petrobras oil company is pictured outside its headquarters in Rio de Janeiro, Brazil, December 17, 2015. REUTERS/Ricardo Moraes

Petroleo Brasileiro SA, as Petrobras is formally known, chartered the DS-5 drill ship in 2008, when it was owned by Pride International, a company Ensco bought in 2011.

The Petrobras notice said Pride had knowledge the rig’s shipbuilder made “improper payments” to a marketing consultant who then shared the money with former employees of Petrobras, Ensco said.

Ensco’s shares were down 9.6 percent at $13.46 on the New York Stock Exchange on Wednesday morning after the filing was made public.

As the world’s most indebted oil company, Petrobras has been looking to cut back spending and sell assets to recover from a scandal that has already forced it to write off $2.1 billion in corruption losses.

Dozens of Brazilian engineering firms accused of price fixing and overcharging Petrobras for work, in order to pass on excess funds as bribes to executives and politicians, have been blacklisted from signing new contracts but have not had existing contracts voided by Petrobras.

Brazilian federal prosecutors said in August that criminal charges related to the DS-5 charter were coming “in due course” but have not yet presented them.

Ensco reiterated on Wednesday it had found no evidence that Pride, the company, or any current or former employees were aware of or involved in any wrongdoing.

The rig contractor said it planned to assert its legal rights under the contract.

Ensco’s other rigs leased to Petrobras will continue to work under their contracts, the filing said.

London-based Ensco said it has not been contacted by other Brazil government authorities regarding alleged wrongdoing.

Reporting by Caroline Stauffer in Sao Paulo and Amrutha Gayathri in Bengaluru; Editing by Don Sebastian and Matthew Lewis