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INTERVIEW-Engie may enter Brazil gas industry, expand in services
December 16, 2016 / 11:38 AM / 10 months ago

INTERVIEW-Engie may enter Brazil gas industry, expand in services

SAO PAULO, Dec 16 (Reuters) - Engie SA could enter Brazil’s natural gas industry through acquisitions as state-controlled Petróleo Brasileiro SA retreats, the French utility’s top executive in the country told Reuters.

Paris-based Engie has held talks with Petrobras, as the Brazilian state oil giant is known, and is waiting for terms and conditions of potential asset sales in the sector, Mauricio Bähr, Engie’s senior country officer in Brazil, said late on Thursday.

Bähr added that Engie planned to expand quickly into services for decentralized power generation.

“We are indeed interested in assets that might be put up for sale,” he said. “Talking about Petrobras, for example, we are interested in entering natural gas, we are looking at gas infrastructure.”

Engie is Brazil’s No. 2 power generator, with total capacity of about 10.2 gigawatts. The company has a 40 percent stake in Jirau, which is now fully operational after the last of its 50 turbines started working two weeks ago. Jirau was inaugurated on Thursday.

The project is considered key to securing the power supply in industrial-rich southeastern Brazil, to where its energy is sent through a 2,400 km transmission line.

Engie is not looking to take on a project as ambitious as Jirau in the near-term. The company is in a legal battle to avoid 2 billion reais ($597 million) in fines from Brazil’s electricity regulator Aneel for delays in construction of the hydroelectric dam.

The French utility believes it had no control over the causes of the delays - which included a revolt by some workers who set fire to workers’ dorms.

“Contracts such as the one for Jirau have to be changed in the future, so new investments can happen. Safety should not be responsibility of the investor, but of the state,” Bähr said.

Petrobras sold a large part of gas infrastructure assets to Brookfield Asset Management Inc in September. The company wants to shed $19.1 billion more in assets through 2018, including gas-fired power plants, terminals and pipelines.

“I believe Petrobras will conduct a reorganization of these assets before selling them,” Bähr said.

Engie is also looking at expanding into services for companies that install solar panels to generate their own energy. It recently won a contract from Centrais Elétricas de Santa Catarina SA to install 1,000 panels mainly for factories and services firms in the Santa Catarina state.

$1 = 3.3524 reais Reporting by Marcelo Teixeira; Editing by Guillermo Parra-Bernal and Mark Potter

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