MADRID (Reuters) - Spanish oil major Repsol (REP.MC) is looking to sell its liquefied natural gas assets in Canada, Peru and Trinidad and Tobago, two sources with knowledge of the situation said, in a bid to boost its finances and credit ratings.
The group is poised to appoint an investment bank to lead an auction, one of the sources said on Thursday. Goldman Sachs is in a pole position for the sale, the person said.
“Repsol is going to start marketing all its LNG assets. It wants to start an auction process in August in order to close the operation after summer,” a financial source said.
The source said Repsol wanted to shore up its financial position that was hurt by the Argentine government’s expropriation of its YPF (YPFD.BA) subsidiary in Argentina earlier this year.
The group is trying to fight the Argentine government’s controversial move in international courts and is seeking compensation. Credit rating agencies are also piling pressure on the group, which is hovering at the last investment grade echelon.
Analysts have valued the LNG assets between 2 billion and 3 billion euros (US$3.7 billion).
The company said in a statement late on Thursday that it was reconsidering the role of its LNG assets as part of a strategy to shore up finances, but it declined to comment further.
The potential sale by Repsol, one of the LNG market’s biggest players, is expected to leave a large gap in the niche shipping trade that has grown significantly in recent years. LNG is natural gas cooled to a liquid for transport in tankers, and has helped connect remote markets across the globe without the need for pipelines.
Repsol has substantially increased its LNG presence over the past three years, supplying more than 12 billion cubic meters of LNG a year to markets in the Americas, Europe and Asia. Repsol traded roughly 19 percent of the LNG imported into the Americas in 2011, according to Waterborne Energy consultancy, which monitors global LNG trade.
“This sale is very significant,” said Steve Johnson, president of Waterborne. “There are players out there that would jump on this kind of supply volume.”
Tight supply and high demand pushed LNG prices in Asia up to four-year highs earlier this year, as suppliers scrambled to find sufficient volumes. In this environment, competitors will be keen to pick up any LNG that might be up for grabs after the sale, Johnson said.
Repsol owns a 75 percent stake in the Canaport import terminal in eastern Canada, which began operations in June 2009. It holds a 20 percent stake in the Peru LNG export plant, which started in June 2010, and also has exclusive export rights from that project. It has been shipping LNG from Trinidad and Tobago since 1999.
More recently, Repsol had supplied regular shipments to Argentina before the South American country seized control of Repsol’s stake in YPF, prompting Repsol to cancel exports there.
Spokesmen for Repsol and Goldman Sachs declined to comment. ($1 = 0.8156 euros)
Additional reporting by Edward McAllister in New York, writing by Edward McAllister, Sonya Dowsett and Sarah White; Editing by Julien Toyer and Jon Loades-Carter