Petrobras to sell pipeline unit to Engie for $8.6 billion

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Petrobras to sell pipeline unit to Engie for $8.6 billion

Thu, 04/25/2019 - 13:21
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Petrobras to sell pipeline unit to Engie for $8.6 billion (Alf Ribeiro / Shutterstock)
Petrobras to sell pipeline unit to Engie for $8.6 billion (Alf Ribeiro / Shutterstock)

ENGIE announces that the consortium in which it holds a majority stake has won the competitive bidding process conducted by Petrobras for the sale of a 90% shareholding in Transportadora Associada de Gás S.A. (TAG) with a final and binding offer amounting to USD 8.6bn.

TAG is the largest natural gas transmission network owner in Brazil, a priority country within ENGIE’s recently announced strategic framework, with an asset base providing an attractive and stable regulated profit stream to ENGIE. TAG assets consists of 4,500 kilometers of gas pipelines in Brazil, which represents 47% of the country’s entire gas infrastructure. In addition to its ownership, ENGIE will be the industrial partner for TAG, managing the asset after the closing of the transaction and taking 100% of the operations and maintenance after the third year.

The consortium around ENGIE topped offers by two competing consortia, led by Itausa Investimentos Itau SA and EIG Global Energy Partners with Mubadala Investment Co, respectively. Two sources with knowledge of the matter said the difference between the bids was very small. The second highest bid, delivered by EIG Global Energy Partners and Mubadala Investment Company, was less than 1 percent below Engie’s bid, they said.

This acquisition is fully aligned with ENGIE’s strategy to be the leader of the zero carbon transition. This transition requires sophisticated large-scale energy infrastructure such as the TAG pipeline network. Natural gas will increasingly contribute to the diversification and decarbonization of Brazil’s energy mix, replacing high carbon energy sources while complementing renewable generation.

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