Petrobras selling oil, gas fields worth up to $2.7b

Petrobras has tried to speed up a programme to sell assets to pay down US$130 billion (S$176 billion) in debt, the largest of any oil company. Its plight has hit Singapore's huge rig builders Keppel Corp and Sembcorp Marine, and trickled downstream t
Petrobras has tried to speed up a programme to sell assets to pay down US$130 billion (S$176 billion) in debt, the largest of any oil company. Its plight has hit Singapore's huge rig builders Keppel Corp and Sembcorp Marine, and trickled downstream to offshore marine companies.PHOTO: REUTERS

Scandal-hit Brazilian state-owned oil firm struggling to pay down debt, fund expansion

RIO DE JANEIRO • Brazil's state- owned oil company Petroleo Brasileiro (Petrobras) is marketing offshore oil and natural gas fields worth as much as US$2 billion (S$2.7 billion) as part of its plan to sell assets and pay down debt.

Three fields - Bauna, Golfinho and Tartaruga - are for sale, according to sources, who add that Bank of America Merrill Lynch is coordinating the sales.

Petro Rio and LetterOne Holdings have put in offers for the Bauna field, said one of the people. Karoon Gas Australia is also bidding, said a spokesman for the firm.

The Brazilian oil producer is cutting spending and selling assets after crude prices tumbled and the country's biggest corruption scandal led to management changes.

The producer aims to raise US$14.4 billion from asset sales this year. Petrobras has 90 days to give a response, one of the people said.

Petrobras declined to comment.

The company has tried to speed up a long-stalled programme to sell assets as it struggles to finance expansion and pay down US$130 billion in debt, the largest of any oil company.

Its plight has hit Singapore's huge rig builders Keppel Corp and Sembcorp Marine, and trickled downstream to offshore marine companies. Nearly half of Keppel and Sembmarine's orders are from Sete Brasil, a Brazilian rig supplier that is teetering on the edge of bankruptcy after its sole customer Petrobras became engulfed in the corruption scandal.

Petrobras has also been at the centre of a scandal in which high- ranking company executives allegedly colluded with contractors to overcharge for projects in order to pay kickbacks and help finance political campaigns.

Former president Luiz Inacio Lula da Silva has also been implicated in the scandal, which is fuelling impeachment proceedings against President Dilma Rousseff.

Earlier this month, it was reported that China's CNOOC was interested in purchasing a minority stake in petrochemical company Braskem from state-run Petrobras.

Braskem's controlling shareholder, engineering conglomerate Grupo Odebrecht, is also seeking to exit Braskem and could sell its stake in a joint transaction with Petrobras, reports said.

Petrobras decided to sell a 36 per cent stake in Braskem in January and is being advised by investment banking firm Banco Bradesco, the sources said. Since then, Canada's Brookfield Asset Management and Saudi Arabian Oil, known as Saudi Aramco, have shown interest in the stake.

Brazil, Latin America's largest economy, is going through a two-year recession that is forecast to be the worst in over a century as a massive corruption scandal at Petrobras threatens the future of President Rousseff, leaving the government unable to pass legislation needed to fix the economy and government finances.

The nation is also looking at eight consecutive week of declining growth estimates, as more than 100 economists surveyed by the central bank on March 11 forecast Brazil's gross domestic product to shrink 3.54 per cent this year, compared to a 3.5 per cent decline estimated in the prior week.

BLOOMBERG, REUTERS

A version of this article appeared in the print edition of The Straits Times on March 19, 2016, with the headline 'Petrobras selling oil, gas fields worth up to $2.7b'. Print Edition | Subscribe