(Recasts with confirmation, deal size throughout)
By Marta Nogueira
RIO DE JANEIRO, Oct 23 (Reuters) - State-controlled Petróleo Brasileiro SA's board approved selling a minority stake in a natural gas distribution unit to Japan's Mitsui & Co Ltd for 1.9 billion reais ($490 million) in a key step toward disposing of non-essential assets to repay debt.
Petrobras, as the oil producer is commonly known, had been engaged in negotiations with Mitsui Gas e Energia do Brasil Ltda over the sale of 49 percent stake in Gaspetro, an investment holding company comprising the interests that Petrobras has in regional gas distributors across Brazil.
The sale of the Gaspetro stake forms part of an asset divestment plan that Petrobras already announced for the 2015-2019 period and that can help the world's most indebted oil firm to remain current on its obligations. Reuters reported, citing a source close to the transaction, that the board had approved the Gaspetro deal.
By partially divesting assets in gas and fuel distribution, biofuels and transport equipment, Petrobras Chief Executive Officer Aldemir Bendine is aiming to speed up the development of promising offshore oil discoveries known as subsalt. Still, Petrobras is putting those assets on the block at a time of plunging oil prices and limited interest from potential buyers.
In a securities filing, Petrobras said that the Gaspetro deal still depends on regulatory approval and could be concluded by December. Under terms of the transaction, Gaspetro will be spun off into two firms that will split control of the latter's natural gas and logistics assets.
Investors and analysts have spotted Mitsui as a natural buyer for some of Petrobras' non-core assets because of the Japanese company's knowledge of Brazil and ability to remain a minority shareholder in large projects and businesses in the country. Mitsui is already a Petrobras partner in eight gas distribution companies in Brazil.
The Gaspetro stake sale gained traction as Petrobras suspended for an indefinite period BR Distribuidora's initial public offering, according to a securities filing.
More than 30 potential bidders have shown interest in buying a stake in Petrobras' fuel distribution unit BR Distribuidora SA, including Chinese companies and financial institutions, the source added.
$1 = 3.8774 Brazilian reais Writing and additional reporting by Guillermo Parra-Bernal; Editing by Diane Craft and Lisa Shumaker