Total S.A., a French oil and gas company has agreed to purchase $2.2 billion worth of assets from Brazilian company Petroleo Brasileiro, or commonly known as, Petrobras.
According to Petrobras, they are expecting to receive around $1.6 billion in cash immediately after the completion of the agreement in the next 60 days, while the remaining balance will be paid throughout the span of the partnership.
Petrobras is on a goal to reduce their $125 billion debt, which was the largest in the world’s oil industry. For the last two years ending in 2016, the company has already reached $13 billion on its total divestment. However, Petrobras is still $2 billion short on its target.
According to Petrobras CEO Pedro Parente, the remaining $2 billion will be added to the company’s 2017 asset sale target.
Total will acquire stakes in two oilfields in Brazil’s Subsalt Polygon. A 22.5% stake will also go to Total in the prospect area lara, which is presently under development in the Santos Basin.
Meanwhile, Petrobras will retain a 42.5% interest in the field and will continue to be the operator of the field. Then, Total will purchase 35% and will be operating the Lapa field, which is also located in the Santos Basin and the Brazilian company will keep 10% of the stake. 50% of two thermal power stations in Bahia state will also be acquired by the French company.
Parente said, “This is a strategic partnership, and our goal is to reduce our exploration risk and improve the operation in the fields we own together.”
“What we want with this whole program is to have resources to help pay our debts. It is a partnership that makes a lot of sense for Petrobras and we are very pleased to have reached the point where we have concluded this general agreement, with the signing of the specific contracts,” Parente added.
Total and Petrobras are currently partners in 19 different oil fields worldwide.
Petrobras is the largest integrated energy firm in Brazil and also the largest in Latin America. Previously, the company has been involved in a multibillion-dollar money laundering and bribery scandal, which greatly affected the company’s credibility. This case has made it hard for Petrobras to find creditors.
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