Petrobras

At the request of TCU, Petrobras changes rules for divestitures

05/16/2017

Petrobras announced on Tuesday the new rules of its program of partnerships and divestments, which had been suspended by determination of the TCU (Court of Audit of the Union). The first test will be the sale of the Azulão gas field in Amazonas, announced on Monday night (15).

Following a recommendation from TCU, the state-owned company tries to give more transparency and open competition by allowing more companies to participate in the negotiations. The state-owned company, however, maintained a rule of direct conversations with companies chosen for processes considered strategic partnerships.

With the goal of capturing $ 21 billion by 2018, the divestment program was launched by the company’s management with the goal of reducing high debt levels. In 2016, the program raised US $ 13.6 billion, with the sale of companies such as Liquigás gas distributor and NTS gas pipelines.

Until the program was suspended by the TCU in December last year, negotiations were only made with companies invited by Petrobras and banks contracted to advise the negotiations. Now, in addition to the invitations, the state-owned company will publish a prospectus of each asset on its website, allowing other companies to enter the dispute.

Altogether, during the sales process, at least five market announcements will be distributed – three more than usual in the previous model. In addition to the announcement on the prospectus, the state-owned company will announce the progress of the negotiations until its conclusion.

The winner’s choice follows an auction model whenever the bid difference is less than 10% of the asset’s value. In this case, the company that made the lowest bid can redo their proposal.

In order to improve governance, the state’s executive board will be more active in the process, with participation in the approval of six stages, four more than in the previous model.

The changes were requested by the TCU when it considered that the process was not very transparent and did not represent the best conditions of competition and, therefore, of benefit for Petrobras.

The company, however, has decided to maintain the possibility of direct negotiations for partnerships, such as the one closed with France’s Total at the end of 2016, which involved pre-salt fields, thermals and natural gas terminals, among other assets.

The justification is that partnerships are associations between two companies and would also bring gains in technological knowledge. In the case of Total, for example, Petrobras says the partner’s experience on the west coast of Africa can help develop reserves in Brazil.

There was only the inclusion of a limit for full sale of assets within the partnership, equivalent to 20% of the total value of the operation – the rest must be limited to partial sale. That is, if Petrobras closes a partnership of R $ 1 billion, it can only fully sell to the member an asset of R $ 200 million. In other cases, you can only sell slices.

In the case of Total’s $ 2.2bn partnership, the French company held 78% of Petrobras’ stake in the Lapa field and 34% of the state’s stake in the Iara area, both in the pre-salt area. In addition, it entered with 50% of the capital in two thermals in Bahia.

Categories: Petrobras

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