Petrobras sale of LPG unit under new scrutiny

State-controlled Petrobras' plan to sell its LPG distribution subsidiary Liquigas to a consortium led by Brazilian investment firm Itausa is coming under renewed regulatory scrutiny.

In November 2019, Petrobras and and the Itausa group — comprised of Nacional Gas Butano, Brazil's fourth largest LPG distributor, and Copagaz, the country's fifth largest — signed a R3.7bn ($915mn) purchase agreement for Liquigas, which holds around 21pc market share.

Anti-trust watchdog Cade has designated the transaction complex and extended its analysis period by 90 days.

"It is a very concentrated sector, with a history of coordination and dominated by four major actors: Ultragaz, Liquigas, Supergasbras and NGB. Copagaz, a medium-sized player, comes next," Cade said in a decision published late yesterday.

Cade says the transaction would result in increased national concentration.

In 2016, Petrobras agreed to sell Liquigas to Ultrapar's LPG arm Ultragaz, the market leader, for around R2.8bn ($818mn). That deal, also deemed complex by Cade, was blocked in 2018 over competition concerns.

The Liquigas sale is part of Petrobras' $20bn-$30bn divestment plan, which envisages a renewed focus on its core deepwater oil production business.

The company was not immediately available to comment.

LPG supplies in Brazil returned to normal this month following a surge in residential demand as a result of lockdown measures to fight the spread of Covid-19 in March.

By Nathan Walters