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CNNMoney.com: Petrobras May Form Group To Buy Exxon South Amer Assets-Paper

October 01, 2007: 09:59 AM EST

RIO DE JANEIRO -(Dow Jones)- Brazilian state-run oil company Petroleo Brasileiro SA (PBR), or Petrobras, is considering forming a consortium to buy Exxon Mobil Corp.’s (XOM) South American assets, the Gazeta Mercantil newspaper said Monday.

According to reports in recent weeks, Exxon Mobil wants to sell its downstream assets in Brazil, Argentina, Uruguay, Paraguay and Chile.

The Exxon assets are valued at about $800 million by Petrobras, but a deal wouldn’t likely close this year, the newspaper said.

A purchase of Exxon’s 1,800 service stations in Brazil would, however, boost Petrobras’ distribution market share in Brazil to close to 50% from 41%, which could raise antitrust concerns, previous news reports in Brazil have said.

To circumvent antitrust issues, Petrobras is considering forming a consortium, Gazeta said, citing unnamed company sources.

A possible partner in such a consortium could be Brazilian fuel and petrochemicals company Ultrapar Participacoes SA (UGP), or Ultra.

Ultra on Friday confirmed its interest in acquiring Exxon’s Brazilian assets, but alone may not have the financial capacity for such a deal.

In March, Ultra became Brazil’s second-biggest distributor when it bought the service stations of local oil company Ipiranga (PTIP4.BR) in the country’s south and southeast, which represent a market share of 15% in all of Brazil.

Petrobras may be competing with Venezuelan state-run oil company Petroleos de Venezuela SA, or PdVSA, for the purchase of Exxon’s South American assets.

According to news reports from Uruguay and Argentina, PdVSA is interested in buying Exxon’s assets there.

Such a move reportedly would be seen as favorable by Argentine President Nestor Kirchner if it were to include Argentina’s state-energy company Enarsa. Also, Kirchner’s government is reluctant to allow a further expansion of Petrobras in the country.

-By Bernd Radowitz, Dow Jones Newswires; +5521-2553-7322; [email protected] dowjones.com;
  (END) Dow Jones Newswires
  10-01-07 0959ET
  Copyright (c) 2007 Dow Jones & Company, Inc.

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