Brazil regulators probed on OGX oversight

brazil_flag12 December 2013, News Wires – Federal prosecutors in Rio de Janeiro have opened a civil inquiry into alleged possible irregularities by Brazilian regulators in overseeing the former OGX, prosecutors confirmed on Wednesday.

The Federal Prosecutors Office provided a document that shows it is investigating the role of Brazil’s Securities and Exchange Commission and National Oil Agency in monitoring OGX’s activities, Dow Jones reported.

Oil company OGX, which has changed its name to Oleo e Gas Participacoes, filed for protection from creditors in October, after a series of operational and financial failures, according to the news wire. The company wasn’t immediately available for comment on Wednesday.

OGX was the backbone of former Brazilian billionaire Eike Batista’s empire and raised billions of dollars from investors over the years. The company first went to the market to sell shares in 2008 and was regarded as a promising global oil company.

A spokesperson for Batista’s EBX group couldn’t be immediately reached for comment by the news wire. EBX is the holding entity for Batista’s companies.

The focus of the investigation is an apparent contradiction between information released to shareholders regarding the company’s oil discoveries and later changes in the company’s plans, halting production and development of oil fields originally considered to have high production potential, the document shows.

In November, after a Brazilian newspaper said OGX knew since 2012 that oil reserves in its oil fields in the Campos basin could be much lower than initially estimated, the company said it always kept the market informed about its production projects “as soon as the analyses were completed, to avoid divulging incomplete information.”

OGX said it carried out a series of studies that concluded the fields in question weren’t viable.

Brazil’s National Petroleum Agency (ANP) said in a written response to a query by The Wall Street Journal that it would cooperate with an investigation, though it hasn’t yet been contacted by the authorities.

Meantime, the Brazilian Securities and Exchange Commission said it has given prosecutors all the information requested so far and is continuously in contact with them.

– Upstream

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