Dudley Buyright

23 Sep 2016 By Sara Silver

State-controlled Petrobras is selling its natural gas pipelines to help pay down debt. Investors from China and Singapore will back the $5.2 bln acquisition led by Toronto-based Brookfield. The clever structure and the buyer’s deep pockets could augur more deals between the two.

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A group led by Brookfield Infrastructure Partners said on Sept. 23 that it would buy 90 percent of Petroleo Brasileiro's natural gas pipeline business for about $5.2 billion.

Backed by CIC Capital of China and Singapore's GIC, the consortium will be controlled by Brookfield, which will contribute at least 20 percent of the investment. Petrobras will keep a 10 percent stake.

Under terms of the deal, there will be an upfront payment of $4.3 billion at closing. The balance of $850 million is to be paid on the fifth anniversary of the closing.

The transaction must be approved by Brazilian regulators. State-controlled Petrobras plans to sell $15.1 billion of assets by year-end and raise another $19.5 billion through divestments and partnerships through 2018 as it seeks to lower its $125 billion debt.

The Petrobras pipeline unit, Nova Transportadora do Sudeste, transports natural gas to Rio de Janeiro, São Paulo and Minas Gerais from Bolivia and Brazil's offshore oil and gas fields.

Context News

A group led by Brookfield Infrastructure Partners said on Sept. 23 that it would buy 90 percent of Petroleo Brasileiro's natural gas pipeline business for about $5.2 billion.

Under terms of the deal, there will be an upfront payment of $4.3 billion at closing. The balance of $850 million is to be paid on the fifth anniversary of the closing.

The Petrobras pipeline unit, Nova Transportadora do Sudeste, transports natural gas to Rio de Janeiro, São Paulo and Minas Gerais from Bolivia and Brazil's offshore oil and gas fields.

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