Brazil Gas Plan Seen Luring Naturgy, Engie, Others

(Reuters, 15.Jul.2019) — Recently announced plans to foster competition in the Brazilian natural gas market may trigger a wave of privatizations among state-controlled distribution companies, luring international and domestic bidders, experts on the sector say.

Brazil’s Cosan SA and Spain’s Naturgy Energy Group SA, are among the companies potentially interested in the segment, which also include Portugal’s Galp, France’s Engie and Spain’s Repsol, consultants, lawyers and other experts said.

Pension and investments funds could also be candidates to buy stakes in the companies, they said.

The plan to overhaul Brazil’s domestic natural gas market, approved by Brazil’s energy policy council in late June, calls for companies with a “dominant position” to sell all of their stakes in distributors.

It is likely to force state-oil firm Petroleo Brasileiro SA to seek buyers for its stakes in 19 out of 27 distributors operating in Brazil.

Petrobras, as the company is known, has struck a deal with local antitrust authority to sell of its gas transportation and distribution assets by 2021.

“There is no doubt…We’ll see a process of privatizations, a pretty strong trend of gas distributors being sold into private hands,” said Rivaldo Moreira Neto, managing partner of Gas Energy consultancy, adding that the process has the backing of both the Finance and the Mining and Energy ministries.

Petrobras holds minority stakes in state-owned gas firms through its subsidiary Gaspetro, in which Japan’s Mitsui holds a 49% stake.

“I think a lot of foreign investors will participate,” said Cid Tomanik Pompeu Filho, an expert in gas at the law firm Tomanik Pompeu, mentioning Galp, Repsol and Engie as likely participants.

Cosan, whose operations involve sugar, ethanol, fuels and logistics, is also a potential interested party, the lawyer added.

France’s Engie, which has previously expressed interest in Petrobras’ gas distributors, declined to comment, as did Repsol, Galp and Cosan.

Naturgy said in a statement that “supports the market liberalization” but separately on Monday filed a motion to contest a proposed energy reform in Rio de Janeiro state where the Spanish company owns a gas distributor.

Writing by Gabriela Mello; Editing by Marguerita Choy

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