Petroleo Brasileiro SA Petrobras (ADR) (NYSE:PBR) has been attracting attention from companies, both nationally and internationally, for the sale of its natural gas pipeline. It is expected that PBR would be able to get as much as $6 billion for the pipeline. It is expected that Chinese, French and Canadian companies would take part in the bidding procedure, but the news is yet to be confirmed by any officials.
Petrobras has a debt load of $130 billion and is currently suffering due to oversupply of oil in the international market. Hence, due to unfavorable market conditions, PBR has decided to sell off some of its assets, in order to repay some of its debts and gain cash for operations. The recent sale of a gas pipeline is part of Petrobras’s plans to sell $14 billion worth of assets, during the year. Added to this, a recent corruption scandal within the company has also made investors lose interest in the stock.
The senate of Brazil has recently passed a bill, to ease some of the company’s burden. As per the new bill, Petrobras would no longer be required to operate new developments in the Subsalt Polygon. The bill also ends the requirement of Petrobras to provide a 30% investment in the region. The law had initially been incepted to exercise more government control of all off-shore oil projects in the Polygon. However, the law had also faced criticism for being a major drawback in attracting foreign investments.
All of the parties associated with the gas pipeline deal, as stated by Brazil’s Valor Economico newspaper, have declined to comment. It is still unclear whether CPNP from China, Brookefields from Canada and Engie SA will even bid for the pipeline. However, if Petrobras is successful in making the deal happen, it would significantly ease the pressure on the company during the current year.
Petroleo Brasileiro SA Petrobras (ADR) (NYSE:PBR) closed at its previous share price of $3.5 per share, without reporting a loss of a gain during the February 25 session, despite having a trade volume of 22.59 million.