October 30, 2018 / 9:59 PM / in 18 days

Exclusive: Petrobras could divest another $20 billion in assets through 2019 - source

RIO DE JANEIRO (Reuters) - Brazil’s Petroleo Brasileiro SA (PETR4.SA) could sell an additional $20 billion in assets through next year, a person with knowledge of the matter told Reuters on Tuesday, indicating that the state-run oil company expects to maintain its robust pace of divestments despite recent setbacks.

FILE PHOTO: The logo of Brazil's state-run oil company Petrobras is pictured in the company headquarters in Sao Paulo, Brazil February 20, 2018. REUTERS/Paulo Whitaker/File Photo

Planned sales of its Pasadena refinery in Texas and two oilfield clusters in the Campos basin could be inked by year end, the source said, declining to be named given the sensitivity of the topics.

Petrobras did not immediately respond to a request for comment.

Petrobras, the world’s most indebted listed oil company, has been seeking to sell assets to reduce its debt load, despite resistance from unions and courts.

From 2016 to the present, it has divested some $20 billion. But as of June 2018, it had completed just $9.5 billion of the $21 billion in divestments it had targeted for 2017 and 2018. It has not released an asset sales forecast for 2019.

Petrobras could conclude the sale of its Pasadena refinery in Texas to Chevron (CVX.N) by the end of 2018, though it will not recover its more than $1 billion investment, the source said.

Reuters reported last week that Petrobras was in talks to sell the refinery to Chevron.

Chevron declined to comment.

A plan, valued at around $1 billion, to sell Pampo and Enchova, two shallow-water mature oilfield clusters located in Brazil’s Campos basin, is also expected to be signed this year, said the source and another person familiar with the matter.

Reuters reported in July that Petrobras had entered exclusive talks to sell the area to Brazilian energy firm Ouro Preto Oleo e Gas, which is backed by private equity firm EIG Global Energy Partners.

EIG could not immediately be reached for comment. Ouro Preto declined to comment.

Petrobras will not achieve the $21 billion 2017-2018 divestment goal without the sale of its TAG pipeline unit, valued at around $7 billion. The TAG sales process, which had been in its final stages, is likely to remain frozen for the time being after a court decision earlier this year requiring sales of units of state companies to get congressional approval.

Brazilian President-elect Jair Bolsonaro, who takes power in January, has said he generally favors allowing Petrobras to sell assets, while opposing a full privatization. New Brazilian presidents typically replace senior management at Petrobras and other state-owned companies, and the pace of divestments could shift under new leadership.

BOOSTING OUTPUT

Petrobras has also been seeking creative ways to boost output from its aging oil fields, selling a 25 percent stake in its prolific Roncador field in the Campos Basin to Norway’s Equinor (EQNR.OL) earlier this year.

In the same vein, the company also sought bids in May from oil services firms Schlumberger (SLB.N), General Electric Co’s unit Baker Hughes (BHGE.N) and Halliburton (HAL.N) for a production sharing agreement for an onshore field in the Potiguar basin.

That would mark the first such deal between oil services companies and Petrobras, with the firms competing by offering to boost output most from the aging Canto do Amaro field.

But a deal is not likely until the first quarter of 2019, the source said. Another person familiar with the matter said an agreement this year was possible but more likely for next year.

Baker Hughes, Halliburton and Schlumberger declined to comment.

Despite the setbacks, Petrobras, which reports quarterly results next week, is likely to reach its goal of cutting net debt to 2.5 times earnings before interest, tax, depreciation and amortization (EBITDA) by year-end, the person with knowledge of the matter said, down from 3.23 times at the end of June.

Reporting by Alexandra Alper and Marta Nogueira; Editing by Christian Plumb and Rosalba O'Brien

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