Page 6 - LatAmOil Week 28

LatAmOil COMMENTARY LatAmOil
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is sale will involve a minority stake, but it will still e ect the privatisation of the latter company. e NOC currently owns 71.25% of shares in the distributor, so the sell-o will bring its stake down below 50% to 46.25%.
Indeed, Petrobras may end up with even less, as the prospectus states that the amount of equity put up for sale could eventually climb to 33.75% via overallotment provisions. is would reduce the company’s total holdings in Petrobras Distribuidora to 37.5%.
And gas distributors too
Meanwhile, this part of the sell-o process is likely to have knock-on e ects.
Petrobras is hiving off the four refineries and its gas distribution subsidiary within the framework of agreements with the Brazilian Justice Ministry’s Anti-trust Division, known by its Portuguese acronym CADE. But it will not stop there, as the agreements provide for the unloading of four additional oil-processing plants. ey also call for the sale of the NOC’s minority stakes in individual gas distribution operators.
Currently, the company is a shareholder in 19 of Brazil’s 27 regional gas distributors. It owns those stakes through its participation in Gaspetro, a joint venture in which it holds 51%. ( e other 49% is in the hands of Japan’s Mitsui.)
Once Petrobras unloads these assets, it will have a much lower pro le in the gas distribution sector. Its exit is likely to leave room for private investors, including European companies such as Galp of Portugal, Engie of France and Rep- sol and Naturgy Energy Group of Spain, and domestic operators such as Cosan, which is involved in the ethanol, fuel, sugar and logistics industries.
The next big target?
e net e ect of these sales will be to dimin- ish Petrobras’ vertical integration. That is,
they will signi cantly reduce the scope of the NOC’s downstream operations. (Hopefully, they will also free up resources for investment in upstream projects, which tend to be more pro table.)
But the process is not likely to stop there. Petrobras has indicated that it does not intend to leave its midstream assets untouched. On July 8, the company revealed that it was prepar- ing to sell o its 51% interest in Transportadora Brasileira Gasoduto Bolivia-Brasil (TBG), a pipeline that pumps natural gas from the Boliv- ian border to Sao Paulo, Brazil’s largest city, under an agreement with CADE.
Petrobras has not said yet whether it intends to unload the stake in one single tranche. But it has already attracted at least one investor: YPFB, Bolivia’s NOC. YPFB already owns 12% of TBG but aims to expand its holdings. (It has not speci ed the size of the stake it hopes to acquire, though.)
Other sales will follow. Petrobras said in a statement on July 8 that its agreement with CADE on the sale of gas transportation and distribution assets also covered Nova Transpor- tadora do Sudeste (NTS), the operator of a pipe- line network serving three states that account for about 50% of Brazil’s total gas consumption, and Transportadora Associada de Gas (TAG), which owns a pipeline network that is more than 4,500 km long.
Even so, the deal with CADE will have a lim- ited impact in the short term. Petrobras said in its statement that the agreement only covered 10% stakes in NTS and TAG – presumably because the company is still facing lawsuits over its earlier e orts to sell o larger slices of these midstream subsidiaries.
Under these circumstances, the NOC is not likely to make a big push for midstream divest- ment in the near term. It has signalled its intent to hive o assets in this sector, but it is taking a slower approach and will probably wait until 2020 or 2021 to focus on its pipeline units™
Mexico finalises new oil hedging formula
Petrobras has “ indicated that it
does not intend to leave its midstream assets untouched
MEXICO
A high-ranking representative of Mexico’s Finance Ministry revealed last week that the government had nalised the formula that will serve as the basis of its crude oil hedging pro- gramme this year.
Gabriel Yorio Gonzalez, the deputy under- secretary of nance for public credit, noted that the new formula revised the mix of fuels that the Mexican government uses when requesting a quote for the purchase of crude oil put options to support the hedge.
He did not divulge the exact nature of these changes but said that the formula now took into account the policy of the International Maritime Organisation (IMO) on the use of high-sulphur fuel oil (HSFO).
“On the back of the changes in the maritime rules for the use of fuels, Pemex updated [the formula], trying to include more liquid mixes that could help better model the Mexican mix,” he said, according to Reuters. “ ose changes have already been done ... [The formula] is ready.”
Traditionally, HSFO has been a signi cant component in the mix of liquid fuels that Mex-
ico uses to devise its hedging formula. In recent
years, though, the IMO has been working with
other organisations to discourage consumption
of HSFO, which contributes to pollution. e organisation is due to roll out new standards in
2020 that bar tankers from burning this type of
fuel. 
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w w w . N E W S B A S E . c o m Week 28 17•July•2019