Petrobras downstream divestitures on course

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Petrobrasy downstream divestitures
Brazil is moving forward with its sale of downstream and midstream assets, executives have told the investment community.

Petrobras downstream divestitures appear to be on course as Chief Executive Roberto Castello Branco reports in a 2nd quarter analysts’ call that the Brazilian state oil company expects to close in “one to two months” on the sale of its RLAM refinery in northeastern Brazil.

Abu Dhabi’s sovereign investment fund Mubadala Investment Co is in exclusive negotiations with Petrobras over the RLAM refinery deal, after presenting the highest bid for the asset during a competitive bidding process in June.

Mubadala Capital’s Brazil team currently manages third-party capital on behalf of Mubadala and institutional investors, including a special situations fund. Total investments in the country is in excess of U.S. $3 billion.

Two other Petrobras downstream divestitures recently in the news include the IPO of its gas pipeline unit; another is the sale of four thermal power plants located in Camacari. Three of the plants are powered by fuel oil; the fourth plant is a bi-fuel plant (diesel or natural gas).

In the 2nd quarter analysts’ call, Petrobras downstream chief Anelise Lara was quoted as saying that the IPO through which the company plans to sell a clutch of offshore natural gas pipelines will occur only in 2021. But Petrobras expects to seal agreements by the end of the third quarter with partners such as Span’s Repsol SA and Galp Energia SGPS SA who will participate in the transaction.

As for the thermal power plants: potential buyers qualified for this phase will receive a process letter with detailed instructions on the divestment process, including guidelines for due diligence and the submission of binding proposals.

The UTEs Polo Camaçari are assets owned by Petrobras and include the Arembepe, Bahia 1 and Muricy plants, with a total installed capacity of 329 MW. The plants operate with fuel oil and have the possibility of conversion to natural gas operation.

UTE Canoas is an asset owned by Petrobras and has installed capacity of 249 MW. The plant is bi-fuel (natural gas and diesel) and therefore has potential operating gains with the expected expansion of the gas pipeline network and/or new regasification terminals.