Enbridge, Fluxys, EIG Bid For Brazil’s Top Import Pipeline: Sources

(Reuters, 21.May.2021) — A consortium of Canada’s Enbridge, Belgium’s Fluxys and U.S. private equity firm EIG Global Energy Partners has submitted a non-binding offer for Brazil’s largest natural gas import pipeline, three people with knowledge of the matter told Reuters this week.

Petroleo Brasileiro SA, as Brazil’s state-run oil company is formally known, put its stakes in the 2,593-kilometer TBG pipeline, which imports gas from Bolivia, and the far southern TSB pipeline up for sale in December. Non-binding offers were due by late April.

The consortium is preparing to submit a binding offer by the July 5 deadline, said the sources, who requested anonymity to discuss private matters. It was not clear if there were competing bids for the assets, which is expected to fetch billions of dollars.

If the consortium is ultimately successful, it would mark Enbridge’s first foray into South America. The Calgary-based company moves about 25% of crude produced in North America and nearly 20% of natural gas consumed in the United States, according to its website.

Enbridge said in a statement that it does not “respond to market speculation or rumors.”

Petrobras, EIG and Fluxys did not respond to requests for comment.

It would also mark a significant step forward in the ongoing drive at Petrobras to divest non-core assets in order to reduce its debt load and sharpen its focus on deepwater oil production.

Petrobras has already sold its stake in the TAG and NTS gas pipeline units to consortia led by Engie SA and Brookfield Asset Management Inc, respectively.

In recent years, Bolivian gas has faced increasing competition in Brazil from cheaper liquefied natural gas (LNG) imported by ship. In the past couple of years, private players have been entering Brazil’s LNG market.

While Petrobras had a near monopoly in natural gas in Brazil until 2015, it has since been selling assets, in a move which is bringing competition and bringing changes to the market’s dynamic.

TBG, formally Transportadora Brasileira Gasoduto Bolivia-Brasil, manages the Brazilian side of the pipeline known as the Gasbol. TBG passes through five southern states, including Sao Paulo, the wealthiest and most populous.

TSB, formally Transportadora Sulbrasileira de Gas, is a far smaller asset – 50 kilometers – managing two pipelines in Rio Grande do Sul, close to the Argentinian border.

Fluxys already holds a minority stake in TBG, which gives it a right of first refusal in the asset, according to the sources consulted by Reuters.

The Belgian natural gas infrastructure group announced in January it had purchased EIG’s 27.5% stake in TBG. At the time, EIG said the sale removed regulatory obstacles to a potential bid for the controlling stake held by Petrobras.

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Reporting by Gram Slattery and Sabrina Valle in Rio de Janeiro and Carolina Mandl in Sao Paulo Additional reporting by Tatiana Bautzer in Sao Paulo and Nia Williams in Calgary Editing by Brad Haynes and Nick Zieminski