Engie Offers $8.6 Billion and Buys Petrobras' Pipeline Unit

Engie Offers $8.6 Billion and Buys Petrobras’ Pipeline Unit

Written by Paulo Nogueira

Published on 05/04/2019 at 19:39

Updated on 05/04/2019 at 19:52

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Surpassing All Offers From Its Competitors, Engie SA Wins Petrobras’ TAG. The Next Step Will Be the Sale of Some Refineries in Brazil

The consortium led by the French Engie SA made the highest bid for an important pipeline unit of Petrobras, the state oil company reported on Friday, as the largest company of all time sees its divestment come to an end.

In a statement, Petrobras, as the company is known, said that the Engie consortium, which includes the Caisse de Dépôt et Placement du Québec from Canada, submitted a bid of US$ 8.6 billion for 90% of the TAG pipeline unit in northern and northeastern Brazil.

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This surpassed the offers from two competing consortiums, led by Itaúsa Investimentos Itaú SA and EIG Global Energy Partners with Mubadala Investment Co, respectively.

The sale is still subject to approval by regulatory bodies and the relevant authorities of the company, the document stated. The price includes the payment by the Engie group of US$ 800 million in debts to BNDES. At an exchange rate of 3.85 reais to US$ 1, according to Petrobras, the deal values all the TAG at 35.1 billion reais.

The divestment represents a victory for Petrobras’ current leadership and for CEO Roberto Castello Branco, who is pushing to aggressively unload assets in an attempt to cut debts and refocus on exploration and production.

Castello Branco, in March, forecasted US$ 10 billion in asset sales in the first four months of 2019, with the sale of TAG pipelines being the main divestment.

The sale process began in October 2017 but was interrupted last year by a Supreme Court injunction and a review of the sale rules by Brazil’s audit court.

In September 2016, Petrobras sold a new gas network pipeline, the Nova Transportadora do Sudeste, with 2,510 km of pipelines, for US$ 5.2 billion to Brookfield Infrastructure Partners LP, which outbid an offer from Engie.

The company is currently preparing the terms for the sale of two refinery groups that are expected to yield several billion dollars. Some mature oil fields and the company’s liquefied petroleum gas distribution unit in the block are expected to bring in several hundred million dollars.

Petrobras will continue to distribute natural gas through the TAG system under the terms of long-term contracts, the company reported in a statement.

Engie Offers $8.6 Billion and Buys Petrobras’ Pipeline Unit

Surpassing All Offers From Its Competitors, Engie SA Wins Petrobras’ TAG. The Next Step Will Be the Sale of Some Refineries in Brazil

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