UPDATE 3-Brookfield-led group to pay $5.2 bln for Petrobras natgas unit

Fri Sep 23, 2016 5:00pm EDT
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(Adds industry comment, details of Petrobras asset sales)

By Jeb Blount

RIO DE JANEIRO, Sept 23 (Reuters) - Brazil's state-owned oil producer Petrobras agreed to sell 90 percent of a natural gas pipeline unit to a group led by Canada's Brookfield Asset Management Inc for $5.2 billion, the companies said Friday.

The move is part of an asset-sale program at financially troubled Petroleo Brasileiro SA, as Petrobras is formally known, designed to reduce the company's $125 billion of debt, the largest in the global oil industry.

The Brookfield-led consortium agreed to pay $4.34 billion for Nova Transportadora do Sul SA, or NTS, when the deal closes and $850 million in five years, according to Brookfield and Petrobras.

The investor group includes two sovereign wealth funds, China's CIC Capital Corp and Singapore's GIC Private Ltd.

For Ricardo Pinto, chief executive of natural gas consultancy Gas Energy in Porto Alegre, Brazil, the sale represents an important step in opening up a Brazilian gas market that has stalled despite increasing gas production.

"Brazil's gas market has been held back by government regulation and Petrobras' dominance of the transportation market," he said. "While the sale will have little immediate impact on gas volumes, it opens the market and Petrobras up to competition."

Reuters reported the main terms of the deal between Petrobras and Brookfield, including the sale price, on Sept. 6, citing sources with direct knowledge of the transaction.   Continued...