Brazil’s government-run oil company Petroleo Brasileiro SA (Petrobras) may seek international arbitration to stem losses from contracts with two thermoelectric power plants, a company spokeswoman has confirmed.

Petrobras is frustrated with attempts to renegotiate power purchase agreements with the 870 megawatt Macae thermoelectric power plant in Rio de Janeiro state, controlled by El Paso Corporation (EP), and the 220 MW MPX Termoceara plant in the northeastern city of Fortaleza, Ceara state, controlled by Brazilian businessman Eike Batista.
The oil firm wants to reduce payments to the power plants, or buy out the two sets of partners, according to a report in the Valor Economico newspaper.
However, if those talks are not resolved soon, the board of directors has authorised the contracts to be taken to the American Arbitration Association. Here, it will argue they are creating damaging financial losses.
Petrobras signed contracts guaranteeing minimum payments to three merchant power plants between 2000 and 2002, to ensure they would be built.
Merchant power plants don’t have fixed contracts for selling power and instead rely on the spot market.