Conduit sells stake in $1.5bn Peruvian pipeline

Brazilian-based Odebrecht has bought a 51% stake in a 1,085km gas pipeline in Peru from private equity firm Conduit Capital Partners.

Brazilian infrastructure group Odebrecht has bought a 51 percent stake in a 1,085 kilometre gas pipeline in Peru from private equity firm Conduit Capital Partners, a spokeswoman from Odebrecht told InfrastructureInvestor.com.
 
Conduit subsidiary Kuntur Transportadora de Gas had won the 30-year concession to build a pipeline running from Peru’s Camisea gas fields, in the south-east of the country, to the southern regions of Arequipa, Puno and Moquegua, in late 2008.
 
Construction for the pipeline is due to start in early 2011, with the environmental studies to be sent to the Peruvian government in June. At that time, the deal with Odebrecht is expected to be formalised. Goldman Sachs and Sumitomo Mitsui Banking Corporation are acting as global financial advisors for the project and are seeking debt funding for 50 percent of its cost.
 
The Peruvian project is especially important to Odebrecht as sister company Braskem is keen to find out how much natural gas exists in the lots the pipeline will take advantage of. Should reserves meet Braskem’s estimates, then the company will proceed with the construction of a $2 billion petrochemicals complex near the southern ports of Ilo and Tatrani, to serve local manufacturing.
 
Conduit signed a memorandum of understanding with Odebrecht since it was awarded the project. But in late 2008, J. Scott Swensen, chairman of Conduit, told the Financial Times:
 
“Where we intend to end up is with the local company having 48 per cent ownership by strategic investors – Odebrecht and one or two others – and we will control 51 per cent of the project between funds that we manage and other investors.”
 
But as it turns out, Odebrecht became the majority owner of the pipeline. InfrastructureInvestor.com tried to contact Conduit to ask what prompted the change in strategy but could not obtain a comment in time for publication.