According to Bloomberg, Blackstone Group and its partner in Brazil, Patria Investimentos Ltda., are competing for Petrobras’ network of pipelines of natural gas in Brazil. This network is located in northeastern Brazil.
There are three groups of companies that have offered bids of up till $6 billion for the pipeline network, according to insider information. Since the negotiations are still currently private, sources have asked to stay anonymous. The two other groups of companies that have made offers are Mubadala Dev. & EIG Global and companies led by French energy company, Engie. The partnership of Mubadala Development and EIG Global Energy Partners have also bid for Petrobras’ 90% stake of TAG, which is the company’s natural gas transportation subsidiary.
As per the sources, Banco Santander is the advisor to Petrobras and the deal is expected to be closed in the first six months of 2018.
A pipeline network of natural gas owned by NTS in the southeastern part of the country was also sold off in 2016. The NTS pipeline was sold for a sum of $5.20 billion to a group of companies headed by Brookfield Asset Management Inc.
The French company Engie is focused on growth with a strategy that aims to grow its presence in Brazil’s natural gas sector. According to an email from a company spokesperson, Engie is concentrating on the regulatory framework as well as the value chain in the gas market. Therefore, all assets that are obtainable in the natural gas industry are being evaluated by Engie.
Petrobras is a state managed semi-public multinational is headquartered in Rio de Janeiro and was ranked number 58 on the Fortune 500 list recently. However, the company has recently suffered a near death experience thanks to challenges faced due to an oil rout as well as a massive scandal regarding corruption in the state-controlled company.
According to another news report by Bloomberg, the company’s new Chief Executive, Pedro Parente, took over office in 2016 and since then has set a very aggressive timetable for the company to turn itself around. The challenge that Parente faces is that 2018 will be the year that the presidential election campaign is set to kick off.
Domestic politics in Brazil are turbulent and unpredictable and could hinder the deals from going through. Parente is hoping to sign off on $21 billion worth of sales of assets over the coming 8 months, before politics take over the country next year before the elections in October 2018. Another project that Parente is trying to close for the company is the review of a deep-water contract which could possibly deliver up to $30 billion in compensation for Petrobras.
Parente is the perfect leader for the company at this time since he is a veteran of handling crises situations. He was the energy minister in 2002, when he had to manage the rationing of power during the country’s worst drought.
Thanks to the political uncertainty ahead, Petrobras is under pressure to complete its projects during the current political administration, which has been favorable for the company. Things have improved for the company as it has managed to push out debt payments, increased its cash situation and also controlled operating costs. In fact, Petrobras was able to surprise markets by completing a huge sale of its assets in 2016 that amounted to $14 billion.
If the company is able to pull of its targets for the next 8 months, then Petrobras will be safer still once Parente’s projects are completed before election campaigning starts next year.