By Tatiana Bautzer
SAO PAULO, March 12 (Reuters) - State-controlled oil firm Petroleo Brasileiro SA will discuss alternatives for its liquefied petroleum gas distribution unit in a board meeting this week, one person with direct knowledge of the matter said.
Petrobras, as the Brazilian company is known, had agreed to sell Liquigas Distribuidora SA to Ultrapar Participações SA for 2.8 billion reais ($859 million), but the deal was blocked by antitrust regulator CADE in February.
Petrobras has officially said it wants to completely exit the LPG distribution business, but will consider options different than a formal sale process to strategic and financial investors.
During the process to sell Liquigas two years ago, the second bid was equivalent to half of Ultrapar's offer, the source added on condition of anonymity.
An alternative to an outright sale would be an initial public offering of the unit, in which Petrobras could sell at least 60 percent of the company, transferring control of Liquigas to the private sector.
Petrobras would be able then to gradually sell stakes in Liquigas until a complete exit, according to the source.
The Liquigas IPO would be different from the initial public offering of its fuel distribution unit Petrobras Distribuidora SA, which is still a state-controlled company after the sale of a 30 percent stake last December.
($1 = 3.2589 reais) (Reporting by Tatiana Bautzer Editing by Paul Simao)