MADRID (Reuters) - Spain’s Repsol (REP.MC) is negotiating the sale of a block of liquefied natural gas assets with more than one international bidder and expects to finalize a deal in the coming weeks, a source with knowledge of the matter said.
The Spanish oil major is selling LNG assets based in Canada, Trinidad and Tobago and Peru in a drive to remove debt from its balance sheet and improve its chances of keeping an investment grade rating.
Earlier, newspaper Cinco Dias said Repsol would likely announce the sale of the assets to Royal Dutch Shell (RDSa.L) after a board meeting on Wednesday.
Repsol declined to comment on any deal, but said the sale of the LNG assets was not on the board’s agenda for Wednesday.
Shell also declined to comment.
Repsol has not provided an official valuation of the LNG interests but in a presentation in August said they had off-balance sheet debt of 3.6 billion euros and gross debt of 1 billion euros.
China’s Sinopec, Russia’s Gazprom (GAZP.MM), GAIL Ltd (GAIL.NS) of India and GDF Suez GSZ.PA of France - in consortium with China’s sovereign wealth fund CIC - have been tipped as other potential bidders.
Goldman Sachs is advising Repsol on the sale, which the oil firm has said it wants to carry out in one block rather than hiving off the assets, in which it is not the sole shareholder.
However, some analysts have expressed doubts that the company could fetch interest for the whole block, particularly from a company like Shell.
“We find the logic of such a deal difficult from Shell’s perspective. We would not expect it to show much interest in Repsol’s stakes in either Atlantic LNG or Canaport, but there may be some synergy on Peru LNG,” said Peter Hutton of RBC Capital Markets.
Repsol, whose shares have risen about 13 percent this year after losing almost a third of their value in 2012 due to problems in Argentine, has said it will halt a second debt-cutting plan to convert preference shares into equity if the LNG sale is a success.
Reporting by Carlos Ruano and Tracy Rucinski; Additional reporting by Rodrigo de Miguel in Madrid and Andrew Callus in London; Editing by Fiona Ortiz and Mark Potter