A consortium majority led by ENGIE has won the competitive tender for a 90% shareholding in Brazil-based Transportadora Associada de Gás S.A. (TAG), fully aligned with the former’s strategy to be the leader of the zero carbon transition.
TAG is the largest natural gas transmission network owner in Brazil, a priority country within ENGIE’s recently announced strategic framework, with an asset base providing an attractive and stable regulated profit stream to ENGIE.
TAG assets consists of 4,500km of gas pipelines in Brazil, which represents 47% of the country’s entire gas infrastructure.
This acquisition is fully aligned with ENGIE’s strategy to be the leader of the zero carbon transition. This transition requires sophisticated large-scale energy infrastructure such as the TAG pipeline network. Natural gas will increasingly contribute to the diversification and decarbonization of Brazil’s energy mix, replacing high carbon energy sources while complementing renewable generation.
TAG will provide ENGIE with revenues based on long-term contracts and the opportunity to broaden its local customer portfolio and develop new uses for gas transportation networks stemming from new technologies such as biomethane and green hydrogen.
Isabelle Kocher, ENGIE CEO, affirmed in a statement, “Our acquisition of TAG is a significant milestone for ENGIE in Brazil, a key market for the group where we have been present for 23 years. It is fully aligned with ENGIE’s strategy to become the leader of the zero-carbon transition, supporting Brazil in the decarbonization of its energy mix.”
“It will also enable the group to build on its infrastructure expertise while diversifying its network activities and seizing opportunities in growing markets.”
The winning offer for the 90% equity stake in TAG was made by a consortium composed of ENGIE S.A, ENGIE Brasil Energia (of which ENGIE holds a 68.7% stake) and la Caisse de dépôt et placement du Québec (CDPQ). Petrobras will maintain a 10% equity stake in TAG. The offer amounted to $8.6bn.
ENGIE’s net total ownership of TAG (directly and indirectly through Engie Brasil Energia) will amount to 49.3%2. As TAG will be jointly controlled, it will not be consolidated into its balance sheets. In addition to its ownership, ENGIE will be the industrial partner for TAG, managing the asset after the closing of the transaction and taking 100% of the operations and maintenance after the third year.
This acquisition is also in line with ENGIE’s objective to rebalance the geographic and regulatory exposures of its networks activities and to benefit from the steadily growing Brazilian gas market.
The transaction is conditional upon the approval of the relevant governance bodies of Petrobras and the Brazilian and European Union anti-trust authorities. The closing is expected before the end of the first semester 2019.
ENGIE and hydrogen
ENGIE has the ambition of being a major player in hydrogen, and firmly believes that hydrogen is the key that will unlock the full potential of renewables and carbon-free energy solutions.
“We are committed to developing solutions based on renewable hydrogen, produced by electrolysis using a green energy supply,” the company states online. “Hydrogen is the missing link for a decarbonised ecosystem, allowing for the harmonious progress of cities, territories and societies around the globe.”
ENGIE aims at operating across the entire value chain of renewable hydrogen, from carbon-free power generation to the three key end uses: mobility, industry and energy storage.