Brazil's Enauta ends deal to sell 45% Manati Field stake to Gas Bridge

Brazilian independent oil and natural gas producer Enauta will retain its 45% equity stake in the offshore Manati Field, ending plans to sell the stake to upstart investor Gas Bridge SA, Enauta said Jan. 3.

"The transaction was subject to a series of preceding commercial and regulatory conditions that should have been met by Dec. 31, 2021," Enauta said. "With the end of the term, the company opted to not extend the time granted to meet the preceding conditions and will maintain the asset in its portfolio."

The failure to close the deal marks a blow for Gas Bridge, a new company formed in 2019 with an eye toward taking advantage of opportunities in Brazil's New Gas Market. The more-liberal rules, which were signed into law in 2021, ended Petrobras' monopoly in the natural gas segment and were expected to create a dynamic market for gas in Latin America's largest economy.

Enauta had agreed to sell its 45% equity stake in the Manati Field to Gas Bridge for about $103 million in August 2020. In addition to the accord with Enauta, Gas Bridge also reached separate deals to buy 10% stakes owned by GeoPark and Petro Rio. The deals with GeoPark and Petro Rio remain pending.

State-led Petrobras also put its 35% operating stake in the field up for sale in 2020.

Enauta and Gas Bridge, however, could still end up partnering for a project involving Manati, according to Enauta. Gas Bridge proposed a partnership that would see the two companies take over the Manati Field and turn the reservoir into Brazil's first natural gas storage facility.

"Enauta, which is interested in maximizing the utility and value generation of Manati, will start an evaluation of this opportunity," the company said.

Gas Bridge would still need to buy out the other partners in the field, according to Enauta.

Production at Manati has been undermined by a lack of domestic demand in the country's downtrodden northeast over the past four-five years, picking up slightly over the past year as Brazil battled its worst drought in nearly 20 years. The lower-than-expected rainfall left reservoirs at hydroelectric dams at record low levels, forcing Brazil to use gas- and fuel oil-fired thermal power plants to meet electricity demand in recent months.

Manati pumped 3.4 million cu m/d in November, Enauta said Dec. 8. That was up from an average of 3.0 million cu m/d in the third quarter and 2.8 million cu m/d in the third quarter of 2020. Manati produced nearly 6 million cu m/d at its peak in the mid-2010s.

Technical troubles

Manati has also faced a series of technical issues over the past six months, including two separate production shutdowns.

Petrobras was forced to shutter output at Manati in September after a leak was discovered in the onshore portion of the field's gas-export pipeline. Production was shut down Sept. 27, with the leak repaired and output restarted on Oct. 3, according to Petrobras.

A second production stoppage was made Dec. 10, when a valve in the underwater portion of the gas-export pipeline was improperly closed. The valve was repaired and production started on Dec. 17.