Petrobras eyes selling thermo units on stock market

Brazil’s state-owned oil firm Petrobras could create a new subsidiary to group its thermopower generation assets and privatize the unit through an initial public offering, local press reported this week.  

The IPO strategy would be in line with CEO Roberto Castello Branco’s view that ”the capital market is the healthiest way to carry out privatizations” as he said in a recent press conference, referring the sell-off of the company's fuel distributor BR Distribuidora via two share offerings on Brazil's B3 stock exchange.  

Petrobras is currently engaged in an asset sale program expected to increase cash flow, reduce its net debt and free up funds for investments in more strategic areas, such as pre-salt exploration and production.  

In another effort to become more competitive, Petrobras announced on Monday it will start to adjust its LPG prices in line with international prices and not at set times. As a result, the company will do with gas prices what it has been doing in recent months with other fuel prices, such as diesel, in an attempt to implement more pro-market measures. Castello Branco said recently the firm’s intention in the coming years is to catch up with its peers.   

Petrobras is also selling refineries, LPG subsidiary Liquigas, and onshore and shallow water fields. Analysts say the company could benefit from becoming more asset-light and achieve higher profitability during times of stable or high oil prices. However, they believe the NOC needs to be careful in this regard.   

“We point out that in a future moment of higher commodities volatility, oil companies with a more diversified portfolio in midstream will have further competitive advantages with a more integrated model since revenues from other segments can maintain profitability when commodity cycles are low,” said analysts at BB Investimentos.  

BNamericas takes a look at Petrobras' thermopower plants:  

TermoCeará: In Ceará state, 220MW capacity. It is dedicated to independent power generation.   

Bahia I: In Bahia state, 32MW.  

Rômulo Almeida: In Bahia state, 138MW. 

Celso Furtado: In Bahia state, 186MW.   

Jesus Soares Pereira: In Rio Grande do Norte state, 323MW.   

Aureliano Chaves: In Minas Gerais state, 226MW.   

Juiz de Fora: In Minas Gerais state, 87MW.   

Luís Carlos Prestes: In Mato Grosso do Sul state, 386MW.   

Mário Lago: In Rio de Janeiro state, 923MW.   

Governador Leonel Brizola: In Rio de Janeiro state, 1,058MW. It is Petrobras’ largest thermo plant.   

Barbosa Lima Sobrinho: In Rio de Janeiro state, 386MW. 

Piratininga: In São Paulo state, 190MW. 

Fernando Gasparian: In São Paulo state, 386MW.  

Sepé Tiaraju: In Rio Grande do Sul state, 249MW.  

Tambaqui: In Amazonas state, 156MW. 

Jaraqui: In Amazonas state, 157MW.  

Arembepe: In Bahia state, 150MW.  

Muricy: In Bahia state, 147MW.  

Baixada Fluminense: In Rio de Janeiro state, 530MW.   

Euzébio Rocha: In São Paulo, 219MW (combined-cycle)