UPDATE 1-Brazil audit sees potential Petrobras losses in Unigel fertilizer deal
(Updates with Unigel statement in paragraph 4)
RIO DE JANEIRO, Feb 5 (Reuters) - Brazil's federal audit court (TCU) on Monday said it has found irregularities in a contract between state-run oil company Petrobras and chemical company Unigel, according to a preliminary review scrutinizing a deal to boost domestic fertilizer output.
Petrobras agreed recently to supply natural gas for Unigel to produce nitrogen fertilizers at two plants it leased from Petrobras in the states of Bahia and Sergipe.
The preliminary review from the TCU's technical staff, first reported on Sunday by local newspaper O Globo, points to several irregularities in the deal, estimating that Petrobras could lose a total of 487 million reais ($97 million) in the eight months covered by the arrangement.
Unigel in a statement said it was working with Petrobras to find a solution to guarantee profitability for the two plants.
Unigel has faced financial headwinds due to high gas prices. A Sergipe government official hailed the gas supply deal with Petrobras as "an emergency solution, important to secure jobs."
In a statement, Petrobras said the deal is a temporary measure to keep the factories open until both firms find a "definitive, profitable and viable solution for supplying these products to the Brazilian market."
Since President Luiz Inacio Lula da Silva took office, Petrobras has reversed course on a prior decision to divest from fertilizer assets. The sector is now considered a strategic priority after a supply crisis caused by the war in Ukraine.
The irregularities detected by TCU analysts are subject to further analysis by the audit court. On Jan. 31, the court gave Petrobras and Brazil's Ministry of Energy five days to respond.
The court warned both parties that it could eventually order the annulment of the deal.
In addition to the Unigel arrangement, Petrobras has announced plans to resume operations at one fertilizer plant by the end of this year and build a second one by 2028.
($1 = 5.0095 reais) (Reporting by Marta Nogueira; Writing by Fabio Teixeira; Editing by David Gregorio and Stephen Coates)
