French energy company Engie SA 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.
Petrobras, 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 kilometres (2,796 miles) of natural gas pipelines in northeastern region of Brazil, include Abu Dhabi state-owned holding Mubadala Development Co, Canada Pension Plan Investment Board (CPPIB) and U.S. private equity group EIG Global Energy Partners, 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, GIC and Mubadala did not immediately comment on the matter. CPPIB and Pátria declined to comment.
The sale of TAG is part of a program of asset sales with a US$21 billion target in 2017-2018, as Petrobras seeks to reduce its US$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.
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 US$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.
(Reporting by Tatiana Bautzer; Editing by Daniel Flynn and Andrew Hay)
(This story has been edited by Kirk Falconer, editor of PE Hub Canada)
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