Petrobras to divest of five groups of assets, including the pre-salt areas

Petrobras to divest of five groups of assets, including the pre-salt areas

Evan Sponagle 25/05/2015

Within its plan to sell assets to reduce the heavy debt, Petrobras announced  a goal of raising $ 13.7 billion from the sale of assets, according to local market sources. .

One of the most valuable assets in the package for sale, is a e thermal power generating plant with capacity of 7 gigawatts. Bradesco BBI was hired to sell a share of 49% of the thermal. There are large global companies interested, but the process is hindered by the fact that the thermal does not have a gas supply contract with Petrobras.  To attract interested partners it would need to secure supply agreements. But the pricing is complex and it would not be possible to supply gas at a price below market from the moment they pass to rely on other partners. Petrobras will study other options for the thermal.

Beside the thermal, the other most valuable asset is a set of four oil fields, in a process coordinated by Bank of America. According to a source, these are areas located in the Campos and Santos Basins and all are pre-salt blocks. BMC-33, Green Turtle (BMC-36), Jupiter (in block BMS-24) and BMS-8. These are assets prior to the law that obligates Petrobras to be the only operator. Also there is expectation that Petrobras will seek minority shareholders for their pipelines and dispose of its stake in Braskem, the petrochemical giant in partnership with Odebrecht.

The pre salt blocks,  BMC-33 is in ultra-deep waters in pre-salt Campos Basin, Petrobras has a 30% stake in partnership with Repsol, which is the operator with a share of 35%, and Statoil, also with 35%. In this block, the main field is Sugar Loaf, with estimated reserves of 700 million barrels of oil and 3 trillion cubic feet (TCFs) of gas. The reserve includes two other findings: the fields Seat and Gávea.

The Green Turtle field belongs 100% to Petrobras and has a potential estimated reserves at 230 million barrels. Will be put into production along with other neighboring field, and both will share the FPSO Cidade dos Campos Goytacaz platform, commissioned to Modec.

The Jupiter field, considered a giant pre-salt find, 37 km from the Lula field (formerly Tupi), has 80% stake from Petrobras, as a partner to Portuguese Galp, with 20%. This field is seen as onerous in terms of investment, it will require a lot of technology due to undesirable presence of carbon dioxide (CO2) in large quantities, which also means that the use of advanced technology for separation of this gas will be needed, which it cannot be burned in the atmosphere.

In BMS-8 block was discovered in the Carcará field, also close to Lula. Petrobras has a 66%  share and is the operator. The project is in partnership with the Portuguese Petrogal, which owns 14%, and the Barra Energia and Queiroz Galvão Oil, each with 10%. The two companies purchased 20% share belonging to Shell.

All these fields are expected to go into production in 2021 and will require a great deal of investment. The idea is to rid Petrobras the weight of these contributions. However, given the current oil prices and the fact that the projects required high investments, the sale may not be easy.

Some interested investors have indicated that they would like the package to include fields already in production, that is, with some generating immediate revenue.

There is an expectation that the new business plan to be released in June, still no release date, will bring clarification on this aspect and other disinvestment processes.

Another block of assets is comprised of 21 natural gas distribution companies in which Petrobras holds majority stake. The idea is to attract a group willing to buy 49% of the holding company that controls the gas distribution, Gaspetro. Itaú BBA has been hired to seek a buyer. The Japanese Mitsui is a partner in some of the distributors and may be a natural candidate to bid for stake in the holding.

The state also seeks a junior partner to Petrobras Distribuidora (BR), which owns gas stations with the Petrobras flag. In this case, the mandate has been given to Bradesco BBI. The gas stations in other countries in South America – Chile, Colombia, Paraguay and Uruguay – are also for sale and Citi has been mandated to sell the controlling interest of these networks. The intention is to sell all to a single group.