Petrobras Divestment Plan

Petrobras is in the process of disposing certain assets as part of its wider US$13.7 billion divestment plan, including thermoelectric power plants, oil and gas, gas distribution and downstream assets, and possibly part of its 36% equity stake in Braskem, a petrochemical company controlled by the Odebrecht conglomerate.

Petrobras has indicated that it will only sell a minority stake in most assets, but this might be subject to review as the divestment process evolves and subject to any changes to the pre-salt laws regarding Petrobras' 30% mandatory shareholding.

Oil and Gas

The oil and gas assets include four oil blocks:

(i) BMC-33

In which Petrobras holds a 30% stake and Repsol and Statoil each hold a 35% stake. This block is in the pre-salt deep waters in the basin Campos and has reserves estimates of 700 million barrels of oil and 3 trillion TCFs of gas.

(ii) Tartaruga Verde (BMC-36)

This block is held 100% by Petrobras and has approximately 230 million barrels in reserves. This block is expected to start production simultaneously with neighbouring block Tartaruga Mestiça. Both blocks will share an FPSO platform to be built by Modec.

(iii) Jupiter (BMS-24)

This block is considered a pre-salt giant in which Petrobras holds an 80% stake and Galp holds 20%. This block is considered to require hefty investments due to high levels of carbon dioxide.

(iv) BMS-8

Petrobras holds a 66% stake and is operator, Petrogal holds 14% and Barra Energia and Queiroz Galvão hold 10% each, after they both acquired their stakes from Shell.

All of the oil and gas assets are in the exploration phase and will therefore require significant capital expenditure, as they are only expected to start producing after 2021. There is speculation that Petrobras' business plan (expected to be released this month) will set out more information on the oil and gas assets that will be divested.

Thermoelectric Power Plants

The power plants are among the most valuable assets of the divestment package with 7GW of capacity and in which Petrobras is willing to sell a 49% stake.

The main obstacle for the sale of these assets is the fact that the power plants do not currently have gas supply agreements with Petrobras in place. The GSAs would need to be in place to attract investors so that they have a supplier in line.

Currently Petrobras supplies gas to the power plants below market price and this would not be possible once a private investor has taken over as the agreements would need to be at arms-length. The lack of clarity regarding the GSAs and the cost of the gas are currently holding up the sale of these assets.

Gas distribution assets

Petrobras is expected to divest a 49% stake in Gaspetro (the holding company that controls its gas distribution assets). Parties that already hold an interest in these distribution businesses include Mitsui, BG/Shell, Total, El Paso (each of them own one third of BBPP Holdings Limited), EIG, YPFB and Odebrecht.

Downstream Assets

Petrobras is also offering a minority stake in Petrobras Distribuidora (BR) that controls Petrobras' petrol stations. Petrol stations in Chile, Colombia, Paraguay and Uruguay will be part of the divestment plan.

13th Bidding Round

The Brazilian National Energy Policy Council (CNPE) published the 13th Bidding Round authorisation on 9 June 2015. According to the Resolution, 266 blocks will be auctioned as well as 11 marginal/inactive areas.

Of the 266 blocks, 182 are located on the onshore basins of Amazonas, Parnaíba, Recôncavo and Potiguar and 84 are on the offshore basins of Sergipe-Alagoas, Jacuípe, Espírito Santo, Campos, Camamu-Almada and Pelotas. The marginal areas are in the Recôncavo, Tucano Sul, Paraná, Barreirinhas, Potiguar and Espírito Santo basins.

The Resolution does not set the official date for the auction, but the Director of the Brazilian National Agency of Petroleum, Natural Gas and Biofuels (ANP) announced on 2 June that the bidding round would occur on 7 October. The expectation is that the round will raise R$2 billion to R$2.5 billion (approximately US$ 680 to US$850 million) in signature bonuses. The Government is basing the minimum bid prices on a US$65 barrel. The concession agreements should be signed in late November or early December.

Please see here for the resolution with the full list of the sector areas.