Engie and Caisse Said to Plan US$9 Billion Pipeline Bid

French utility Engie SA and a Canadian pension fund plan to offer as much as US$9 billion (34 billion reals) for Petrobras’s natural gas pipeline network, potentially a US$1 billion boost from their initial bid.

Petroleo Brasileiro SA is now finalising terms with Engie and the Canadian fund, Caisse de Depot et Placement du Quebec.

Petrobras then plans to touch base with other groups for a second round of bids that must meet the terms agreed to with Engie. In April, Mubadala Development, in a consortium with EIG Global Energy Partners, and Macquarie Group Ltd presented two separate bids, people said at the time.

The 2,800-mile (4,500 kilometre) pipeline network, Transportadora Associada de Gas, or TAG, spans ten states in north-eastern Brazil. It is being sold as part of a wider push by Petrobras to sell US$21 billion in assets to slash debt.

If consummated, it would be the company’s biggest divestment ever.

Engie, whose initial US$8 billion bid including debt was the highest, is planning to raise its offer to ensure it prevails at a time when cheap credit is available to help finance the acquisition.

Petrobras aims to conclude a deal this year but the divestment programme still faces uncertainty. In July, Ricardo Lewandowski, a Supreme Court judge, ruled that the sale of any government-owned company asset, including subsidiaries, must be approved by Congress.

Petrobras will try to resume negotiations over TAG even without a final decision from the court, Valor newspaper reported on the 10^th October.

In 2017, Petrobras sold Nova Transportadora do Sudeste, a similar but smaller pipeline network in Brazil’s south-east, to a consortium led by Brookfield Asset Management for US$5.2 billion.

Source: Rigzone