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Exclusive: Engie, Mubadala, Pátria among groups vying for Petrobras Brazil gas pipeline
October 31, 2017 / 9:06 AM / 22 days ago

Exclusive: Engie, Mubadala, Pátria among groups vying for Petrobras Brazil gas pipeline

SAO PAULO (Reuters) - French energy company Engie SA (ENGIE.PA) and Brazilian investment firm Pátria Investimentos Ltda are among 20 groups interested in a controlling stake in a gas pipeline network owned by Petroleo Brasileiro SA, four people with knowledge of the matter said.

FILE PHOTO: The logo of French gas and power group Engie is seen at the CRIGEN, the Engie Group research and operational expertise center, in Saint-Denis near Paris, France, Saint-Denis, France, February 29, 2016. REUTERS/Jacky Naegelen/File Photo

Petrobras (PETR4.SA), as Brazil’s state-controlled oil company is known, will receive a first round of non-binding proposals for a 90 percent stake in Transportadora Associada de Gás SA, known as TAG, by the end of November, the people said.

Other contenders for TAG, which owns 4,500 kilometers (2,796 miles) of natural gas pipelines in the northeastern region of Brazil, include Abu Dhabi state-owned holding Mubadala Development Co., Canada Pension Plan Investment Board (CPPIB), and private equity group EIG Global Energy Partners LLC, the sources added.

Singapore’s sovereign wealth fund GIC Pte Ltd., which bought a minority stake in another gas pipeline network from Petrobras last year, is also analyzing the investment, according to the sources, who asked for anonymity because they are not authorized to discuss the matter publicly.

Petrobras, EIG, Engie and GIC did not immediately comment on the matter. CPPIB, Mubadala and Pátria declined to comment.

The sale of TAG is part of a program of asset sales with a $21 billion target in 2017-2018, as Petrobras seeks to reduce its $95 billion debt pile - the largest in the global oil industry.

TAG’s sale is expected to be one of the largest Petrobras divestments this year. The state oil company expects strong interest from investors as Brazil’s economy slowly emerges from its worst recession in a century.

Petrobras preferred shares rose 0.66 percent to 16.88 reais on Tuesday, extending this year’s gains to 13.6 percent.

The sales this year include a planned stock market IPO of fuel distribution unit BR Distribuidora and partnerships with oil majors in oil fields. Some of them ruffled feathers with oil workers unions and have been targeted by court injunctions trying to block them. Petrobras has been able to overturn most of the injunctions in appeals courts.

One of the sources said Petrobras aimed to fetch a price above the $5.2 billion paid last year by a group led by Brookfield Asset Management for another gas pipeline company, Nova Transportadora do Sudeste SA, which owns a larger natural network covering southeastern Brazil.

Although TAG has a smaller network and serves an area responsible for a lower share in natural gas consumption, better perspectives for economic growth and investments could justify a higher price, the sources added.

Additional reporting by Stanley Carvalho in Abu Dhabi; Editing by Daniel Flynn and Andrew Hay

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