BG selling lucrative asset in Brazil to focus on oil and gas fields
UK gas producer BG Group has announced a deal to sell its stake in Brazil's Comgas to Sao Paulo-based Cosan for 1.8bn dollars. BG said it expected to deal to be completed by the end of the year.
The group also reported a surge in first quarter profits, which jumped to 2.2bn from 1.4bn a year earlier. Revenue rose 20% to 5.8bn. Profits were boosted by higher production and robust energy prices.
BG Group has delivered significantly stronger financial results in the first quarter and with new production coming on-stream, further progress on our major projects, and continued exploration success, we remain firmly on track to achieve our long-term objectives, said Sir Frank Chapman, BG Group's chief executive.
Cosan SA runs the world’s largest sugar-cane processor with Royal Dutch Shell and is expanding into the fuel supply business. The two companies signed an accord for the purchase of BG’s 60.1% stake in Comgas and expect to complete the deal by the end of this year.
“The deal is in line with Cosan’s plan to diversify away from the volatile, hard-to-anticipate swings in sugar and ethanol prices,” Erick Scott Hood, an analyst with SLW Corretora.
Brazilian billionaire Rubens Ometto, the founder and chairman of Cosan, has sought to expan.d from sugar cane-based ethanol to fossil fuels since the company’s purchase of Exxon Mobil Corp’s distribution assets in Brazil for 826 million dollars in 2008. Cosan has since derived most of its sales from fuel and lubricant distribution.
Comgas is Brazil’s largest gas distribution company. Shell, which jointly controls ethanol producer and fuel distributor Raizen with Cosan, holds an 18.1% stake in Comgas, BG said.
BG is seeking to raise 5 billion dollars through asset sales to focus on investments in oil and gas fields in Brazil, the North Sea and Australia.
“We look forward to concluding this deal as part of our plans to release some 5 billion of capital in the next two years through strategic divestments” BG CEO Chapman said in the statement.
Ometto is the world’s largest sugar-cane grower.