Petrobras denies competition breach

Brazil's federal energy major Petrobras (NYSE: PBR) has denied claims it breached federal competition laws by signing contracts without an open bidding process.

Local newspaper Folha de S.Paulo last week alleged the company had signed contracts worth a total 90bn reais (US$40bn) in the past three years without competitive tenders.

Petrobras said in a statement that its contracts followed rules outlined in a 1998 competition decree issued by then-president Fernando Henrique Cardoso.

"Bidding is the rule for any procurement of works, supply of goods or services," Petrobras said.

But the Rio de Janeiro-state firm said bidding could be "waived" in special cases such as when the supplier holds a patent or copyright.

"Our practice is always to seek competition by getting at least three price proposals, even if the legislation dispenses with the formal bid," Petrobras said.

"Direct contracting alone does not generate reduced competitiveness. It will always be the market situation, and not the company, that will indicate whether competition is feasible or not and on which scale it will occur."

The comments come as Petrobras faces a growing list of corruption claims.

The firm's CEO Maria das Graças Foster this week appeared before the senate to defend claims Petrobras paid up to 20 times the market value for a refinery in Pasadena, Texas.

Last month the company's former downstream operations director Paulo Roberto Costa was arrested in Rio de Janeiro on money laundering charges.

Petrobras has also faced accusations that company officials accepted bribes for contracts with Dutch supplier SBM Offshore.