Petrobras agrees to sell pipeline unit to Engie consortium for USD $8.6 billion

The Engie consortium, which includes Canadian pension fund Caisse de Dépôt e Placement du Québec, presented a USD $8.6 billion bid for 90 percent of Petrobras’ TAG gas pipeline unit in northern and northeastern Brazil. It was successful against two bids by competing consortiums.

The divestment represents a victory for current Petrobras leadership and Chief Executive Roberto Castello Branco, who is pushing to aggressively unload assets in a bid to cut debt and refocus on exploration and production.

Engie subsidiaries in different countries account for 75 percent of the winning consortium and the Canadian pension fund the other 25 percent. Engie states they are committed to supporting and developing a new vision of energy for the world of sustainable energy available to everyone. The Group is focused on applying its expertise in four key sectors: natural and renewable gas, renewable electricity, energy efficiency and digital technologies.

Payment by the Engie group includes USD $800 million in debts to Brazilian state development bank BNDES. At an exchange rate of 3.85 reais to USD $1, Petrobras said, the deal values all of TAG at 35.1 billion reais. The sale process began in October 2017 but was interrupted last year by a Supreme Court injunction. In September 2016, Petrobras sold a larger gas network pipeline, Nova Transportadora do Sudeste, for USD $5.2 billion to Brookfield Infrastructure Partners LP, which beat out a bid by Engie.

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