March 25, 2014 / 9:56 PM / 5 years ago

Brazil president under fire for Petrobras Texas refinery deal

BRASILIA (Reuters) - Opposition legislators asked Brazil’s top prosecutor on Tuesday to investigate President Dilma Rousseff’s role in the purchase of a Texas refinery by Brazil’s state-run oil company Petroleo Brasileiro SA (PETR4.SA) which critics say was way overpriced.

Brazil's President Dilma Rousseff speaks at a joint news conference with European Council President Herman Van Rompuy and EU Commission President Jose Manuel Barroso (unseen) during an EU-Brazil summit in Brussels February 24, 2014. REUTERS/Francois Lenoir

Rousseff, who chaired the company’s board at the time, said last week her approval of the 2006 purchase was based on a “flawed” and “incomplete” executive summary.

Mounting criticism of the deal puts her in a difficult position by providing her opponents with ammunition to attack her reputation as a good administrator just six months before she seeks reelection to a second term.

A group of lawmakers led by Senator Randolfe Rodrigues of the socialist PSOL party asked Prosecutor General Rodrigo Janot to investigate whether Rousseff lied about the refinery deal.

Federal police are already probing the Pasadena, Texas refinery purchase. Investigators at Brazil’s TCU audit court have questioned the value Petrobras paid for the asset, which processes about 100,000 barrels of crude a day, including the heavy crude that dominates Petrobras output.

Petrobras, as the company is known, paid $360 million to buy 50 percent of Pasadena Refining System Inc in 2006 from Belgium’s Astra Oil NV, more than eight times what Astra paid for the whole refinery a year earlier. The price rose to $1.18 billion in 2012 after a dispute between Astra and Petrobras led to Petrobras’ buyout of Astra’s stake.

Justice Minister José Eduardo Cardozo said the call for a new probe added no new facts and was clearly an attempt to make political hay out of the case by focusing on the president.

Rousseff’s most likely rivals in the October 5 election, Senator Aecio Neves of the main opposition party PSDB and Pernambuco state Governor Eduardo Campos are both calling for a congressional inquiry into the refinery purchase.

While it is unlikely that Rousseff will face prosecution, the investigations could undermine her comfortable lead over the most likely opponents in current opinion polls ahead of the October 5 election.

Petrobras is already in the spotlight due to investigations in Brazil and abroad that company officials accepted bribes from Dutch oil production ship leaser SBM Offshore NV (SBMO.AS).

These allegations have added to criticism of the performance of Petrobras under Rousseff’s watch. She was chairwoman of the company from January 1, 2003 until March 19, 2010 when she stepped down to run for president

The state-run company’s debt has ballooned by 64 percent since Rousseff became president on January 1, 2011 to $114.3 billion at the end of 2013. The debt is the largest of any oil company, according to Thomson Reuters.

Petrobras debt has soared as Rousseff and her Workers’ Party pushed the company to spend billions on developing giant new offshore resources while controlling the price of gasoline and diesel fuel on the domestic market.

With the country’s refineries unable to meet demand, rising imports are being sold at home at a loss.

The world’s sixth-largest company as recently as 2008, Petrobras has lost half of its market value since Rousseff became president and is now worth about $74 billion.

Additional reporting by Jeb Blount in Rio de Janeiro; editing by Andrew Hay and Richard Chang

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