Caskets Lie in the Way of $21 Billion in Petrobras Asset Sales
(Bloomberg) -- Every now and then, Anelise Lara has to pass a row of coffins laid out near Petrobras’s offices in Rio de Janeiro, where she runs the oil giant’s $21 billion divestment program.
The caskets are a protest by workers fearful the assets she’s pushing to sell will go to foreign companies more focused on profits than the people of Brazil. For them, “privatization” is a tough concept to swallow. For Lara, it’s a necessary step toward renewal for a company shaken by a costly corruption scandal and shouldering the oil industry’s heaviest debt load.
The sell-off offers “the best way to clean up our company,’’ Lara wrote in a recent letter to workers. “The faster we reduce debt, the faster we resume growth.’’
Chief Executive Officer Pedro Parente has said he wants to complete the company’s divestment drive by year’s end. While Petrobras is still $16 billion short of his goal, it now has nine deals moving into the bidding phase, according to a company presentation Tuesday.
“We are very confident,” Parente said on Tuesday, speaking after the company announced its best quarterly results since 2013. Helping fuel that confidence is Lara and her team.
In December, Lara’s group helped engineer the sale of a $3 billion legacy field stake to Norway’s Statoil ASA, and opened Brazil’s biggest filling station chain to investors. Next in line: A 4,500-kilometer (2,800-mile) pipeline system that would end Petrobras’s near monopoly on the natural gas supply chain, but could fetch around $8 billion.
Petroleo Brasileiro SA, the company’s formal name, is now said to be in final talks with three bidders for the system, led by a group including French utility Engie SA. The timing suggests a sale could come before a presidential election set for October that’s putting the state-controlled company’s future on the line.
Some candidates have supported Parente’s asset-sale program, the largest in the oil industry. Others have questioned it. Meanwhile, Lara remains a calm center within a sometimes chaotic process that has drawn frequent protests from workers -- the coffins carry the names of Parente and Chief Finance Officer Ivan Monteiro -- and a skeptical eye from some in Congress.
“It’s an especially tough job,” said Giovani Loss, a partner at law firm Mattos Filho, which has worked with Lara and the company on past deals. “She needs to face ideology issues, political issues, possible resistance even inside the company, demanding control bodies. Not to mention the ambitious sales target itself. ”
In this environment, Lara -- named to the asset-sale job in May 2016 -- is getting good marks for being the right person at the right time to pull off such an activity. While both Lara and Parente declined to be interviewed about Lara’s role as protests and political uncertainty swirl around the divestment program, others aren’t hesitant to point out her attributes.
“When you only have big people on the table, there is a risk no one listens,” said Jorge Mitidieri, director at upstream supplier Ocyan, formerly Odebrecht Oil and Gas. “She listens, and she makes everyone else listen to each other. It’s very impressive to watch her work.”
Mitidieri was on the other side of the table to Lara when his company was negotiating the pioneer platform for Brazil’s largest producing reserve, Libra, which started production in November. She has a knack for keeping executives focused and on the same page, during negotiations that can include participants from oil companies around the globe.
Jorge Camargo, formerly the chief of Petrobras’s international division and now an analyst at the Cebri think tank, says a combination of factors has put her in a position to be a positive force for the company in sale negotiations.
“She has had a brilliant three-decade career at the company,” he said in an interview. “She’s respected, well-prepared, one of Petrobras’s best talents." At the same time, Camargo described her “unruffled way of convincing people” as “a key skill for a negotiator.’’
Lara oversees all major deals at Petrobras in the Acquisition & Divestment department. With the company’s debt higher than $100 billion in 2017, her group has been working more with the “D’s of divestment, than the “A”s of acquisitions, she has told subordinates. On the shelf to be sold: assets from all parts of the business, including biofuels, petrochemicals, refining and gas and oil extraction in Brazil and abroad.
She joined Petrobras in 1986, and obtained a degree in Petroleum Engineering. In 1994, Lara earned a PhD degree in Earth Sciences from Université de Paris 6, France.
When she was named to guide the divestment effort, she immediately faced a key challenge when Brazil’s audit control body, known as TCU, suspended all divestment by Petrobras, saying the company needed to be more transparent on its activities in order to avoid the appearance of favoritism moving forward.
Lara responded and, within months negotiated a new set of rules that allowed the company to reopen talks on potential deals that had been stalled by the initial ruling.
“Selling asset at a state-controlled company is especially difficult,” said Camargo, the former Petrobras executive. “You can have one person moving things forward, and 20 holding deals back.”
Now, Lara is approaching what could be the biggest divestment yet for Petrobras, the sale of the company’s natural gas pipeline unit in northeastern Brazil, a network that spans ten Brazilian states. The company, led by Lara’s team, is in the process of renegotiating bid terms with a group led by Engie, according to people who asked not to be named because the discussions are private.
When the new terms are defined, the company is expected to go back to the other two groups that also bid for a second round of offers. Mubadala Development, together with EIG Global Energy Partners, and Sydney-based Macquarie Group Ltd., presented two separate offers to Petrobras on April 19, people have said.
A decision could come within weeks, bringing the company’s divestments since Lara took on the job to as much as $13 billion, or almost two-thirds of the $21 billion goal.
©2018 Bloomberg L.P.