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OGX says $850 mln Petronas deal may end up in arbitration

Thursday, 31 Oct 2013 | 9:50 AM ET

SAO PAULO, Oct 31 (Reuters) - OGX Petróleo e Gas Participações SA, the beleaguered Brazilian oil company controlled by former billionaire Eike Batista, said on Thursday it expects to end up in arbitration over a deal struck with Malaysian state oil company Petronas.

The day after filing for bankruptcy, OGX said in a securities filing that it had struck a deal with Petronas in the middle of this year for which it should have received about 1.9 billion reais ($869 million).

"That effectively has still not happened and will probably generate an arbitration process to resolve the issue," OGX said in a statement signed by Chief Executive Paulo Simões.

The companies announced the deal, originally valued at $850 million, in May. Petronas was to take a stake in two offshore Brazilian oil blocks, potentially throwing a lifeline to Batista as he sold off parts of his industrial empire to pay down debts.

OGX sought court protection from creditors on Wednesday in Latin America's largest-ever corporate bankruptcy filing.