Who Needs a Natural Gas Field? Petrobras Is Looking to Sell

Petrobras (NYSE:PBR)(NYSE:PBRA) — a Brazilian multinational energy company that is part-owned by the state — has grown too large for its own good. The firm is one of the largest corporations in the world with a market cap of over $110 billion. Year-end sales for 2012 were $132.16 billion, a 15 percent increase on the year and the third consecutive year of growth.

But bigger is not always better, especially in the capital-intensive oil and gas industry, where scaling is both costly and risky. A rapidly-shifting global energy economy has forced established oil and gas players to remain on their toes. Large oil and gas companies have abandoned unattractive assets and many have adopted programs focusing on core assets. In this spirit, Petrobras is reportedly exiting its entire position in Peru with asset sales valued at as much as $9 billion.

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Six high-level unnamed sources tell Reuters that Petrobras is looking to sell its Peruvian assets — most of which consist of two natural gas blocks — in order to focus on projects off the coast of Brazil. The sources report that Petrobras has already shopped some of its assets, although officials have declined to comment publicly.

“Petrobras does not discuss specific asset sale plans and in the case of a sale would only make the sale public when its complete,” a company official in Brazil said, according to Reuters. However, two of the sources say that the sale would represent a total withdrawal from the country.

The two fields reportedly up for grabs are stakes in lot 57 and 58 of the Camisea natural gas fields. Each lot has proven reserves of 2 trillion cubic feet, but sources suggest that the fields may contain as much as 10 trillion cubic feet. Petrobras also owns an oil exploration block in Peru, but a sale is not expected to generate much cash.

The sale looks like it is part of Petrobras’ effort to raise $237 billion for a massive five-year investment plan. The initiative — the largest corporate investment plan in history — is aimed at increasing the company’s output to more than 5 million barrels per day, which would make it one of the largest producers in the world.

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A possible purchaser of the assets could be Royal Dutch Shell (NYSE:RDSA)(NYSE:RDSB). In February, the company bought some Peruvian liquefied natural gas assets from Repsol, a Spanish company.

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