First Reserve, a US private equity group with $19bn under management, has committed up to $500m for investment in Barra Energia Petróleo e Gás, a Brazilian start-up that will seek exploration and production opportunities in the country’s oil and gas industry.
“This is an investment in the right place, at the right time and with the right team,” said Will Honeybourne, managing director of First Reserve. “Brazil has relatively unexplored areas of large resources, which makes it an attractive place to invest.”
He added: “This is an investment based on long-term supply and demand trends. We aim to build the company through acquiring reserves and adding real value and ultimately list it in Brazil.”
Brazil has caught the attention of the world’s oil and gas industry since 2007 when it discovered potentially enormous reserves of oil and gas in its “pre-salt” fields, so called because they are trapped under several kilometres of sea water, rock and a hard-to-penetrate layer of salt.
The discoveries promise to catapult Brazil into the big league of oil producers.
Barra Energia is led by João Carlos de Luca and Renato Tadeu Bertani, each with long experience of Brazil’s oil and gas industry including several years in senior positions at national oil company Petrobras.
Mr de Luca said Barra Energia would seek to build a portfolio of exploration and production assets both onshore and offshore, initially in shallow waters, either alone or in partnership with other companies operating in Brazil, which might include Petrobras. It would not initially try to operate in the pre-salt fields.
Mr Honeybourne said the increasing industry focus on the pre-salt fields was expected to open opportunities in other areas.
Mr Bertani said: “We can add value through the expertise we bring, through technology and through new ways of moving assets up the value chain.”
First Reserve cemented its position as the energy sector’s biggest private equity investor last year by raising $9bn for its latest fund.
The creation of Barra Energia is First Reserve’s first direct investment in Brazil. However, it has investments in oil and gas service companies operating there and has backed similar oil and gas start-ups in Singapore, the North Sea and the US.
Get alerts on Oil & Gas industry when a new story is published