Private Equity Hunts for Brazil’s Next Big Oil Startup

From Bloomberg

By Peter Millard

Brazil’s plan to sell offshore oil licenses for the first time in six years is sending private- equity investors on a search for startups to compete with global producers including Royal Dutch Shell Plc (RDSA) and BP Plc. (BP/)

Denham Capital Management LP, the Boston-based energy investor overseeing $7.3 billion, is among funds in talks with startups before a government auction, said Victor Munoz, Denham’s head for Latin America. Ouro Preto Oleo & Gas, a Brazilian explorer financed by Rio de Janeiro-based fund Turim, is seeking to attract investors, said Dirceu Abrahao, the startup’s ventures director. Agua Grande Petroleo, backed by Toronto-based Forbes & Manhattan, is also looking for additional private funding, Chief Executive Officer Peter Boot said.

“We’re exploring opportunities,” Munoz said in an interview from Sao Paulo. “The life of an exploration company is access to more concessions.”

President Dilma Rousseff’s plan to auction 172 blocks in May means producers can expand in Brazilian waters, six years after the world’s largest oil discoveries since 2000 were made in a region that may hold more than 50 billion barrels of oil. The sale will attract private equity-backed ventures looking to replicate the success of Barra Energia Petroleo & Gas, the oil startup that owns 10 percent of one of the country’s biggest fields, KPMG adviser Manuel Fernandes said.

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