Brazilian state-held oil and gas company Petrobras has agreed to sell a 90% stake in its wholly-owned gas pipeline unit TAG (Transportadora Associada de Gás) to a consortium of the French energy group Engie and the Canadian pension fund Caisse de Depot et Placement du Quebec for a total consideration of US$8.6bn. The transaction price includes US$800m to pay TAG’s debt to Brazil National Development Bank (BNDES). Engie's net total ownership of TAG (directly and indirectly through Engie Brasil Energia) will stand at 49.3%, while Petrobras will retain a 10% interest.
TAG operates and manages a 4,500-km long pipeline network, located mostly in the North and Northeastern parts of Brazil. The company’s transport capacity is 74.7 mcm/d. It represents around 47% of the pipeline extension in Brazil and 26% of the total domestic gas transportation capacity. The assets are regulated by the Brazilian oil and gas regulatory agency, Agência Nacional do Petróleo, Gás Natural e Biocombustíveis (ANP).
The sale of TAG was announced in September 2017 and the non-binding phase started in October 2017. However, it was suspended by the 5th Federal Regional Court of Brazil in June 2018. Petrobras 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. However, the entire privatisation of the company has been ruled out by the government so far.