Engie and Caisse de dépôt et placement du Québec (CDPQ), in a consortium, have made the winning bid of $8.6bn to acquire a stake of 90% in Brazilian natural gas transportation network Transportadora Associada de Gás (TAG).
The consortium prevailed in a competitive process for the sale of the stake in TAG was held by Petrobras.
TAG with nearly 4,500km of gas pipeline infrastructure is the largest natural gas transportation network owner in Brazil. The company’s assets are located on the coast of the Northeast and Southeast regions and also along a stretch that connects Urucu to the city of Manaus (AM).
TAG’s network also comprises 12 gas compression stations and 91 delivery points.
CDPQ infrastructure executive vice-president Emmanuel Jaclot said: “We are very pleased to work alongside ENGIE, a world leader in its industry. We welcome the company’s knowledge of the energy sector and their long track record in Brazil.
“Our first infrastructure investment in Brazil represents an important step in the geographic diversification of our portfolio, a key component to long-term performance.”
Engie will hold a stake of 58.5% in the Brazilian gas transportation network while CDPQ will own the remaining 31.5% stake. Petrobras will retain a 10% stake in TAG’s capital.
As per the terms agreed by the parties, Engie will handle the operation and maintenance of the midstream operator after the third year.
Petrobras will continue to use the natural gas transportation services of TAG under existing long-term contracts between the two parties.
For Engie, the transaction marks its foray into the Brazilian natural gas segment and helps in diversifying its operations in Brazil. The French energy company, currently, operates more than 32,000 km of gas pipelines across Europe, Mexico, Argentina, Chile and Turkey.
Engie Brasil CEO Maurício Bähr said: “TAG’s acquisition is an historic event for ENGIE in Brazil, where we have been operating for 23 years and where the company is always positioning itself as a long-term investor based on its belief in the country’s potential.
“The transaction will be instrumental in the Group’s rapid growth in Brazil from new sources of revenue, ensuring the sustainability of our presence in the domestic market, as well as illustrating our commitment to the Brazilian energy transition.”
The transaction is subject to the approval of Petrobras governance and competitive defense bodies and Brazilian anti-trust authority Conselho Administrativo de Defesa Econômica (CADE) and the European Union anti-trust authority.