Petrobras draws bids for Gaspetro pipeline business in Brazil

By ICHIRO SUZUKI, JONATHAN LEVIN and CRISTIANE LUCCHESI
Bloomberg

Suitors including Mitsui & Co. and Marubeni Corp. are preparing to submit bids as early as this week for a stake in a gas pipeline unit that Brazil’s state-run oil firm is selling as part of a wider divestment plan, said two people with knowledge of the sale.

Companies from China and Spain are also preparing to deliver proposals to Petrobras for 49% of Gaspetro by July 17, several people said, asking not to be identified discussing a private process. Mitsui, Japan’s second-biggest trading house, has been expanding in Brazil since it bought a group of distributors from Enron in 2005.

Petroleo Brasileiro SA, as the Rio de Janeiro-based producer is formally known, joins major oil companies including Chevron and Eni who are selling assets amid a rout in oil prices to raise cash and reduce operating costs. Petrobras plans to divest $15.1 billion in assets by the end of next year to meet investment goals and start addressing the oil industry’s biggest debt load.

“No decision has been made at present,” Mitsui spokesman Shuhei Iwanaga said. Marubeni has also not made any decision on the asset at this point, a company spokeswoman said, declining to be named in line with corporate policy. A Petrobras press official declined to comment.

Pipeline Network

Gaspetro has more than 7,000 kilometers (4,300 miles) of gas pipelines in Brazil that supply residential and industrial users, according to Petrobras’s website. Petrobras is cutting spending at peripheral businesses to focus on its most promising oil fields in deep waters of the South Atlantic.

Mitsui is considered a natural buyer because it has worked with Petrobras in the past and is used to owning non-controlling stakes, according to one of the people familiar with the situation.

Other companies that received invitations to participate include Gas Natural Fenosa and Engie, the utility formerly known as GDF Suez, another person said. Neither company responded to e-mails seeking comment.

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