The company has dropped its bid to buy stake in Brazilian engineering company Odebrecht’s natural gas pipeline concession in Peru.
Sempra said in a statement: "Negotiations have terminated without an agreement.”
The move comes in the wake of refusal by Peruvian authorities for the removal of an anti-corruption clause from the contract.
The statement said: “Despite significant efforts, the Peruvian government expressed its inability to provide necessary assurances that the concession would not be cancelled due to alleged legal violations by the seller or its affiliates.”
Odebrecht, which controls 55% of the pipeline project, is "at the center" of the biggest graft scandal in Brazil, Reuters reported.
Currently, the Peruvian prosecutors are investigating “potential wrongdoing” in the awarding of the pipeline contract.
Sempra said: “As a consequence, a fundamental condition that was required for us to consider entering into final and binding agreement was not satisfied.”
Its decision is a latest blow to Odebrecht’s plans to divest its assets to offload its huge debt. It also faces penalties worth $2.1bn in Brazil.
Sempra’s announcement is also a setback for efforts being made by other partners of the project to save it, as the government may go for a new auction, the publication reported.
Peruvian builder Grana y Montero and Spanish energy company Enagas are the junior partners on the project, holding stakes of 20% and 25% respectively.
Image: Odebrecht controls 55% of the pipeline project. Photo courtesy of Gasoducto Sur Peruano SA.
