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Brazil's Petrobras to sell oil, gas fields in Bahia state, Espirito Santo Basin

Rio de Janeiro — Brazilian state-led oil company Petrobras plans to sell onshore fields in Bahia state and offshore fields in the Espirito Santo Basin, the company said Monday.

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The company continued to push ahead with asset sales under a $26.9 billion divestment program for 2019-2023 in the wake of a key Supreme Court decision.

The latest asset sales add to the more than 100 fields Petrobras currently has on the auction block under the divestment program, which also includes government-backed moves to end the company's monopolies in refining, fuels distribution, fertilizers production and natural gas distribution. Petrobras plans to use proceeds from the sales to fund development of ultra-deepwater oil and natural gas fields discovered in Brazil's subsalt frontier.

In Bahia, Petrobras plans to sell the company's 100% stake in the Conceicao, Fazenda Matinha, Fazenda Santa Rosa and Querera fields in the onshore Tucano Sul Basin, the company said. The fields produced about 29,000 cu m/d in 2018, with no oil output, Petrobras said.

The package of fields includes all export and processing infrastructure necessary to maintain and increase output going forward, Petrobras said. Petrobras also said it is interested in a sales and purchase agreement with potential investors to buy the fields' gas output.

The sales process is open to any oil company that holds at least a C operator classification from Brazil's National Petroleum Agency, or ANP, or operates onshore fields outside Brazil.

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Petrobras also put up for sale the Peroa and Cangoa gas-producing fields and the Malombe gas discovery in the offshore Espirito Santo Basin, the company said. Petrobras owns 100% of the fields and 88.9% in the BM-ES-21 block containing the Malombe discovery, the company said. Spain's Repsol retains the remaining 11.1% of Malombe, but has already released its rights to Petrobras pending ANP approval.

The new buyers would own 100% of Peroa, Cangoa and Malombe, Petrobras said.

Peroa and Cangoa are shallow-water gas fields about 50 km offshore, according to Petrobras. Peroa, which pumped first gas in 2006, produces about 769,000 cu m/d, Petrobras said. Cangoa started operations in 2009 and produces about 176,000 cu m/d, the company said. Output from the fields was briefly stopped in 2018 before being restarted.

Gas output from the two fields peaked at about 7.3 million cu m/d in 2008, according to Petrobras.

The deal includes the PPER-1 platform and a gas pipeline that connects the platform to the Cacimbas gas processing plant. The platform is currently connected to three production wells at Peroa and a single production well from Cangoa, Petrobras said.

Malombe, meanwhile, was discovered in 2011 and is currently undergoing an evaluation of its development plan, Petrobras said. The field is expected to be declared commercially viable for development in the second half of 2019, with a final investment decision expected by the end of this year, Petrobras said.

The field, which is expected to pump first gas in the first quarter of 2023, is estimated to produce 2.5 million cu m/d at its peak, Petrobras said. The Malombe discovery well is about 15 km from the PPER-1 platform, making tiebacks economically feasible.

Potential investors must hold an A operating license from the ANP, which clears possible buyers to operate offshore fields, Petrobras said.

LIQUIGAS BIDS COMING

In a separate statement, Petrobras said it remains in talks with potential investors to buy Liquigas, Brazil's second-largest LPG distributor. Petrobras reached a deal last year to sell Liquigas to rival Ultrapar, but the deal was halted by regulators amid antitrust concerns.

Petrobras reopened the bidding earlier this year, with several investment funds showing interest, according to sources with knowledge of the sales process. Petrobras is currently in the binding phase of negotiations, which started June 20, the company said.

"The current phase will only end with the reception of binding offers, so it's not possible to know at this time the values or the number of potential binding offers referenced in this operation," the company said.

-- Jeff Fick, newsdesk@spglobal.com

-- Edited by Jennifer Pedrick, newsdesk@spglobal.com