Temasek Holdings from Singapore Investing in Brazil´s O&G Market

New Wave Media

Continuing the influx of foreign investments in Brazil´s O&G market, that has attracted investment groups from Europe, North America and Asia. Singapore state investment holding Temasek has recently acquired shares from Brazil´s Odebrecht Oil & Gas (OOG).

Negotiations to conclude the deal have been going on for five months and the final agreement has been drawn whereas Temasek bought 14.3 % of OOG for $400 million. OOG´s main interest in the partnership was to attract capital in order to increase its international presence and expand it deepwater drill rig construction program in Brazil. OOG hopes that the new partnership will help it secure the $3.5 billion in investments it that planned for 2011-2013.

The Odebrecht group which includes a major construction business, along with driller construction and O&G exploration and production, will maintain control of OOG with 85,7 % shares. The decision to make this association with Temasek is driven by the need to capitalize the company in a moment of great demand in the Brazilian O&G sector, according to OOG president Miguel Gradin. Also according to the company´s president an IPO may be considered if market demands continue increasing.

Temasek has a worldwide investment profile in excess of $133 billion and 12 offices around the world, mostly focusing on emerging economies. The Singapore based holding company has been present in Brazil since 2008.

This is another good example of how the Brazilian O&G market is attracting investors from around the world. Recently China´s Sinopec has concluded partnerships with Statoil and Repsol, including aquiring offshore blocks in Brazil.

It looks as though investors are considering the Brazil risk worthwhile even with the possibility of a more leftist government being elected next week. The truth is that the Brazilian government, whatever the electoral results, still has international credibility due to its stability history from the last two decades and the expectation of future growth and market demands due to the country´s acknowledged potential in new major oil discoveries, mainly but certainly no exclusively due to the recent major pre-salt discoveries.

 

Claudio Paschoa