Shell well positioned in promising Brazilian gas market

Jan 16, 1997 01:00 AM

Shell has positioned itself to become a leader in Brazil's promising natural gas market by buying a minority stake in Sao Paulo state-owned Comgas. "There is room for growth in Brazil and we would like to take part," Shell Brasil S.A. president Willem Goebel said. He said Shell Brasil would seek to become Brazil's second-largest natural gas distributor once the government approves a new law regulating the opening of the country's oil sector. "If the law permits, Shell will invest," Goebel said. Shell Brasil paid 74 million reals for 1.7 billion common shares of Comgas, a 19.86 % voting stake, from the city of Sao Paulo at an auction Wednesday on the Sao Paulo Stock Exchange. Goebel declined to say what other investments Shell plans in the Brazilian gas sector. Local press reports said the purchase may be annulled as a result of protest by brokerage firm Bozano, Simonsen, which claimed the auctioneer failed to acknowledge its bid during the auction. Comgas, which is expected to be privatised in October, hopes to increase gas distribution to 8 million tons by 2000 from the current 3 million tons. The firm accounts for 30 % of all natural gas sold in Brazil. The state government decided to privatise Comgas so that private investors can carry out the company plans to invest $ 300 mm a year by 2000 to expand its gas distribution network in the state. Goebel said Shell could pay for up to 20 % of total Comgas investments as a result of the acquisition.

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