Brazil’s Odebrecht plans oil expansion

The
oil and gas arm of Odebrecht, one of Brazil’s biggest multinationals,
is hoping to treble revenues over the next three years as it seeks to
tap the potential of the Latin American country’s vast offshore
oilfields.

The ambitious plans from Odebrecht Oil and Gas, which is part-owned
by Temasek, Singapore’s sovereign wealth fund, follow the company’s sale
of a separate stake to JPMorgan’s flagship Brazilian hedge fund and
private equity group, Gávea Investments.

“We want to create the largest provider of services to Petrobras and we are making investments with that in mind,” said Roberto Ramos, chief executive.

Brazil’s vast deepwater oilfields, known as “pre-salt” because they lie in the seabed under two-kilometres of salt, promise to catapult the country into the ranks of the world’s top oil producers over the next decade.

Petrobras is leading the project with a five-year $225bn capital expenditure programme that ranks among the world’s largest and is attracting global oil and gas groups, services companies and consultancies.

Mr Ramos said the Odebrecht unit was investing $5bn in equipment, from drilling ships and floating oil platforms to pipeline laying vessels.

“This year we should [have] revenues of about $500m and we are going to double that next year, and be at $1.5bn by 2013”.

The investments by Temasek, which bought 14.3 per cent of Odebrecht Oil and Gas last year for $400m, and Gávea, which bought 5 per cent this month for an undisclosed amount, come as increasing numbers of investment groups are targeting Brazil.

Last year, private equity groups spent $5.62bn on buy-out deals in Brazil, about 10 times the level a year earlier, according to Dealogic, the data firm.

Private equity transaction volumes have dried up this year in line with the global financial crisis but domestic and global firms are raising billions of dollars for longer term investment in Brazil.

Based on Temasek’s investment, Gávea, in which JPMorgan’s Highbridge Capital Management bought a 55 per cent stake last year, is likely to have paid about $140m for its stake in the Odebrecht unit.

Arminio Fraga, one of the founders of Gávea and a former Brazilian central bank president, said last week the stake in the Odebrecht unit was the group’s largest single investment to date.

Mr Ramos said Odebrecht, which works with groups such as Denmark’s Maersk and ConocoPhillips, would seek to sign contracts with other international companies in Brazil.

“Petrobras is the main source of work in Brazil but there are international oil companies [here] with a very significant presence.”