Reeling from debt and a massive corruption scandal, Brazil’s state-owned oil giant, Petrobras, is divesting all of its electricity sector assets as part of its move to refocus on oil and raise over $57 billion to pay off debt.
Petrobras has announced it will sell off major assets including thermal power plants, pipelines and regasification terminals.
The move will remove Petrobras’ status as an integrated energy company.
Petrobras has 21 thermal power plants in nine states in Brazil, with the state of Rio de Janeiro holding a 47 percent stake in these plants.
It will also be divesting more than 9,000 kilometers of pipelines and two regasification terminals in the states of Rio de Janeiro and Ceara.
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In December 2015, Petrobras sold its 49 percent stake in its gas subsidiary, Gaspetro, to Japan’s Mitsui for $500 million.
In July last year, Petrobras said it would sell off $15-billion in assets by the end of 2015. In reality, though, only $0.7 billion in assets were sold by 31 December. By the end of 2018, the goal is to sell off $42 billion in assets.
Petrobras has failed to reach ambitious production targets set years ago. It has more debt than any other oil company in the world. It is suffering from low oil prices. It is also a shadow of its former self because of the massive corruption scandal that has bogged it down for more than a year.
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On 12 January, Petrobras once again revised its five-year oil production plan down. The 2015-2019 plan now calls for just $98.4 billion in capital expenditures, down by $32 billion, or about 25 percent, from the original plan released last year.
There is now talk that Petrobras could end up divesting much more than electricity assets, and that despite its restructuring to focus on oil alone, it may be pushed to sell off some of its offshore oil and gas exploration assets to foreign investors better equipped to drill here.
By James Burgess of Oilprice.com
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