Brazil's Petrobras awarded a 90 per cent stake in TAG - its natural gas pipeline arm to an ENGIE-led consortium for an US$8.6 billion winning bid.
TAG (Transportadora Associada de Gás) is the largest natural gas transmission network owner in Brazil, representing 47 per cent of the country’s entire gas infrastructure. TAG assets consist of 4,500 kilometres of gas pipelines in Brazil.
Engie said buying TAG, which achieved core earnings of $1.14 billion in 2018, would provide a steady stream of profits in a priority country within ENGIE’s recently announced strategic framework.
TAG has “an asset base providing an attractive and stable regulated profit stream to ENGIE,” the company said in a statement.
The consortium with ENGIE includes Canada’s la Caisse de dépôt et placement du Québec (CDPQ). Petrobras will keep the remaining 10 percent.
“Our acquisition of TAG is a significant milestone for Engie in Brazil, a key market for the group where we have been present for 23 years,” said Engie chief executive Isabelle Kocher.
Engie said the acquisition of TAG would result in its net debt increasing by around 1.6 billion euros ($1.8 billion).
ENGIE’s net total ownership of TAG (directly and indirectly through Engie Brasil Energia) will amount to 49.3 per cent. In addition to its ownership, ENGIE will be the industrial partner for TAG, managing the asset after the closing of the transaction and taking 100 per cent of the operations and maintenance after the third year.