BG Group, a large partner of Petrobras in pre-salt oil fields, will reinvest in Brazil the $1.7 billion it got with the sale of its stake in gas distributor Comgás to ethanol group Cosan, a deal concluded early this month. “The money raised with the sale of Comgás will be entirely reinvested in Brazil,” said BG Chairman Andrew Gould. He took over the position in May and has the short-term challenge of finding a replacement for CEO Frank Chapman, who retires in 2013.
BG’s sale of its 60% stake in Comgás to Cosan was part of its global strategy of selling assets in gas transmission and distribution, as well as power generation. The company is trying to streamline its portfolio, concentrating investments in exploration and production of oil and natural gas, especially in Brazil and Australia, countries where BG is currently focusing efforts and investments.
“If all deals we announced were concluded, we would have reached our target of $7.6 billion up to mid-2013,” he said. The executive was in Brazil to meet with BG Brasil managers and meetings with government officials in Brasília. The $7.6 billion will mostly be used, Mr. Gould says, in the Brazil and Australia projects.
Down Under, BG invests in coal gas to be liquefied and focuses on exports. In Brazil, where it is one of Petrobras’s largest partners in pre-salt fields, located in ultra-deep waters, the focus is on oil production. The company aims to produce 600,000 barrels of oil equivalent (BOE) a day by 2020. To reach that goal, it announced investments of $30 billion until the end of the decade, with more than $5 billion already invested. The company aims to become the second-largest oil producer in Brazil, after Petrobras.
BG’s growth in Brazil also includes new offshore exploration opportunities. “If there is a new [bidding] round for offshore exploration, I’m sure BG would be interested in participating,” said Mr. Gould.
Mr. Gould gave as examples of divestitures, besides Comgás, the sale of its power generation in the Philippines, of its transmission and distribution assets in India and of a regasification terminal in Chile. BG also closed a deal to sell its stake in Argentinian gas distributor, which controls MetroGas, also a distributor. Mr. Gould said the divestment program was concluded with the sale of its part in a natural-gas project in Queensland, Austalia, to China’s Cnooc.
Even with the Comgás sale, there is a possibility of BG Brasil supplying natural gas from the Lula field in the Santos Basin to the distributor, as long as there are adequate volumes and commercial conditions. In a statement, BG said: “BG has been holding constant talks with Comgás — as well as other distributors — about the possibility of supplying natural gas. There are still uncertainties about the volume of natural gas coming from the Lula [field] that will be effectively available for commercialization. This uncertainty comes from the fact that tests are still being conducted to define the quantity of gas that will be necessary to re-inject in the field to optimize oil production. This information is crucial for the parts to progress in agreements.”
The Lula field is one of the five areas in which BG has a stake in the Santos Basin pre-salt. The others are Iracema, Sapinhoá, Iara and Carioca. Mr. Gould said the company doesn’t have any plans to sell assets in the Brazilian pre-salt. In 2011, there were rumors that BG would sell part of its assets in Brazil. In response to a Valor question about whether the hypothesis of selling pre-salt assets was considered, Mr. Gould said: “I believe we may have tested the market, but nobody would get close to what we believed the assets’ value would be. Thus, we removed [the idea] from the market. And at the moment there is no plan to sell any pre-salt asset.”
Source: Valor International