Brazil’s oil and gas M&As, asset acquisitions on the rise

M&As and asset acquisitions in Brazil’s oil and gas sector have increased this year and are likely to keep doing so until the end of 2024, according to KPMG partner Paulo Guilherme Coimbra. 

In the first half of the year, the sector saw 14 transactions compared with 16 in all 2023. 

Examples include the combination of 3R Petroleum and Enauta, Petrobras’ acquisition of the latter’s stake in blocks ES-M-598 e ES-M-673, and Petrorecôncavo’s sale of 50% of its interest in seven Potiguar basin concessions to Mandacaru Energia. 

In the same period, Ultrapar purchased 71 service stations from the Pão de Açúcar group.  

“Brazil's a very stable market in which to make investments. As well as upstream, we've seen operations taking place in the downstream segment,” Coimbra told BNamericas. 

If the consultant’s forecast is confirmed, 2024 would be the first year since 2021 – when 31 operations took place, from 11 in 2020 – of oil and gas M&A and asset acquisition growth. In 2022, there were 28 transactions. 

“The last few post-pandemic years have been difficult following a period of low interest rates and a lot of liquidity, with a large flow of IPOs, which facilitated access to financing,” Coimbra said. 

Amid the COVID-19 pandemic, Brazil’s Selic policy rate reached a minimum of 2.0% between August 2020 and March 2021 and remained under 10% until February 2022. Since then, it peaked at 13.75% before falling to the current 10.5%. 

The drop also coincides with the slowdown of Petrobras’ divestment program, mainly after the start of President Luiz Inácio Lula da Silva’s current term in January 2023, when it was practically terminated.  

Despite the energy transition environment, Coimbra believes oil and gas will keep playing an important role. 

"There is a lot of talk of reducing the carbon footprint, but what's happened is an increase in the share of coal and oil and gas in the energy sector," he said.