In a filing with local stock regulators after markets closed Friday, Petrobras said the deal was completed Friday after Tereos, Petrobras' partner in the joint-venture company, made the cash payment and fulfilled all of the conditions set out in the sales contract signed December 28. The two companies entered exclusive negotiations for the sale in October.
The Guarani sale was part of five asset sales allowed to move forward by Brazil's Federal Audit Court, also known as the TCU, which is conducting a broad review of Petrobras' divestment program. In December, the TCU prohibited Petrobras from signing any new sales contracts until the review had been completed. TCU officials returned from a year-end recess last week and appeared poised to allow the divestment program to move forward, but one of the court's ministers asked to take a second look at the case.
The TCU halted Petrobras' divestment plans and carried out an extensive review of the sales process amid concerns that asset sales could be "directed" toward specific parties in much the same way construction contracts were diverted to companies that had paid bribes in the Operation Car Wash scandal. The TCU requested that Petrobras improve the transparency of the asset sales.
The Guarani deal was part of Petrobras' $13.6 billion of divestments in 2015-2016, falling short of the company's $15.1 billion target. In 2017-2018, Petrobras plans to ramp up asset sales with a two-year target of $21 billion.
In addition to the TCU injunction, several lower courts have also issued injunctions blocking individual asset sales as part of a series of nuisance lawsuits carried out by workers at the Sindipetro Sergipe-Alagoas union. Petrobras has overturned several injunctions on appeal, while other judges have refused to remove the prohibitions until after the TCU has issued its ruling.
Legal experts in Brazil expect most of the injunctions to be lifted after the TCU clears Petrobras' divestment plan.
The Guarani sale was part of five asset sales allowed to move forward by Brazil's Federal Audit Court, also known as the TCU, which is conducting a broad review of Petrobras' divestment program. In December, the TCU prohibited Petrobras from signing any new sales contracts until the review had been completed. TCU officials returned from a year-end recess last week and appeared poised to allow the divestment program to move forward, but one of the court's ministers asked to take a second look at the case.
The TCU halted Petrobras' divestment plans and carried out an extensive review of the sales process amid concerns that asset sales could be "directed" toward specific parties in much the same way construction contracts were diverted to companies that had paid bribes in the Operation Car Wash scandal. The TCU requested that Petrobras improve the transparency of the asset sales.
The Guarani deal was part of Petrobras' $13.6 billion of divestments in 2015-2016, falling short of the company's $15.1 billion target. In 2017-2018, Petrobras plans to ramp up asset sales with a two-year target of $21 billion.
In addition to the TCU injunction, several lower courts have also issued injunctions blocking individual asset sales as part of a series of nuisance lawsuits carried out by workers at the Sindipetro Sergipe-Alagoas union. Petrobras has overturned several injunctions on appeal, while other judges have refused to remove the prohibitions until after the TCU has issued its ruling.
Legal experts in Brazil expect most of the injunctions to be lifted after the TCU clears Petrobras' divestment plan.
BIOFUELS EXIT
Petrobras is in the process of exiting the biofuels sector, one of several segments including fertilizers, petrochemicals and natural gas distribution that the company is leaving to focus on its core business of oil and natural gas exploration and production, especially in the offshore subsalt region. In 2008, Brazil's government pushed Petrobras to invest heavily in biofuels production to boost output in the sector.
Guarani is Brazil's third-largest sugar producer, with seven mills in Brazil and one in Mozambique. The deal will give Tereos, the world's third-largest sugar producer, full control of Guarani.
The sale of Petrobras' stake in Guarani followed a December 16 deal to sell a 49% stake in Nova Fronteira Bioenergia S.A. to partner Sao Martinho for shares valued at $133 million. In addition to Guarani and Nova Fronteira, Petrobras held stakes in sugar mills in the states of Goias, Minas Gerais and Sao Paulo. The facilities had installed capacity to produce 1.65 billion liters of ethanol per year, Petrobras said.
Petrobras is also seeking buyers for several biodiesel plants. The company operates three biodiesel plants in the Brazilian states of Bahia, Ceara and Minas Gerais. Petrobras also holds a stake in biodiesel producer BSBIOS, which operates two biodiesel plants in Parana and Rio Grande do Sul states, as well as a stake in Belem Bioenergia Brasil, a joint-venture company created with Portugal's Galp Energia.
Belem Bioenergia Brasil produces palm oil in Para state that is used to blend with diesel at refineries in Portugal.
Petrobras' exit from the biofuels industry is expected to open up space for new players in a market that is expected to remain one of the world's most dynamic. Brazil is committed to using its massive agriculture sector to reduce carbon emissions under the Copenhagen agreement via the increased use of biofuels, especially hydrous ethanol and biodiesel.
Brazil blends 27% anhydrous ethanol with gasoline sold at the pump. While there are no plans to increase the anhydrous ethanol-gasoline blend further, additional growth could come from hydrous ethanol. Nearly 90% of all new cars, trucks and light commercial vehicles can run on gasoline, hydrous ethanol or any combination of the two fuels, although the price of ethanol, which contains a lower energy content than gasoline, must be about 70% of the price of gasoline to be economically attractive to Brazilian motorists.
Last year, a sugar shortage caused ethanol prices to spike as higher margins for sweetener caused many mills to opt for sugar production rather than biofuel output.
The country also mixes 7% biodiesel with diesel sold at the pump, but that blend will rise to 8% on March 1 under a government-ordered mandate to increase the biodiesel-diesel blend. Additional increases of 1 percentage point will follow on March 1 of 2018 and 2019 until Brazil reaches a 10% biodiesel-diesel blend. Studies are currently under way on eventually raising the blend to 15% or higher, government officials say.
Fount: https://www.platts.com/latest-news/agriculture/riodejaneiro/brazils-petrobras-completes-sale-of-stake-in-21808471
