The Federal Supreme Court of Brazil has issued an order to prevent state-run oil and gas company Petrobras to sell some major subsidiaries, considering that the sale of those assets should be carried out through an auction, after Congressional approval.
The concerned assets include eight refineries with a total refining capacity of 1.1 mb/d in Brazil (expected to raise US$15bn in proceeds), Petrobras' wholly-owned gas pipeline unit TAG (Transportadora Associada de Gás) and its Araucaria Nitrogenos fertilizer unit. Petrobras had already secured approval from the antitrust regulator for the sale and had reached an agreement with a consortium of the French energy group Engie and the Canadian pension fund Caisse de Depot et Placement du Quebec in April 2019 to sell a 90% stake in TAG for a total consideration of US$8.6bn. The TAG sale had received the approval of the Supreme Judicial Court (second highest court in Brazil) and of the national solicitor-general.
Many other divestments have been subject to contradictory decisions by high-ranking courts and authorities in recent years. Petrobras will evaluate the decision and act appropriately on behalf of its investors and its own interests. The group needs to sell non-core assets in order to reduce its massive net debt of US$73bn (as of January 2019). Over the 2016-2018 period, Petrobras divested assets worth US$20bn and could sell another US$20bn worth of assets through 2019.
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