Oil giants seek renewable assets for acquisition in Brazil, sources say

04/02/2019

Major global oil companies have looked with interest at Brazil’s energy market in search of new opportunities for acquiring renewable assets in the country, seen as one of the most attractive in the world for investments in solar and wind generation, two sources close to Reuters confirm.

The move involves at least France’s Total and Norway’s Equinor, which already owns clean energy assets in Brazil, and Shell, both sources said, with one of them pointing out that British BP would also target the sector.

The companies’ strategy seems to be still at an early stage, the sources said, noting, however, that the initiative of foreign companies contrasts with recent statements by Petrobras president Roberto Castello Branco.

In a presentation last month, Petrobras CEO told reporters that renewables are not the company’s priority at the moment, but a long-term perspective, given the company’s focus on investments in oil and gas exploration in deep and ultra-deep waters.

Already foreign companies have shown an appetite for wind or solar projects, mainly operating assets or that are still on paper, but already with contracts for the sale of energy, said one of the sources, who spoke on condition of anonymity.

“They have looked at, evaluated some processes (mergers and acquisitions), but today there are not as many good assets available in the market,” he said.

“Yes, we have felt this movement, in fact. It is still a moment of study, of definition of paths. This movement is global, “said the second source, who also asked for anonymity.

Total Eren, a Total Renewables company, has three solar plants under construction in Brazil that are expected to start operating this year with a capacity of 140 megawatts, and admitted to Reuters that it is still eyeing more opportunities.

“Our team in Brazil is currently working on the development of new projects and is still looking for new ones,” said the company, which declined to comment on specific deals.

Equinor also declined to talk about possible investments in particular, but highlighted the appetite for growth in clean energy.

“Throughout the world, Equinor is committed to providing energy in a more sustainable way and we believe that the generation of energy from renewable sources will be a fundamental part of this. Brazil has great potential for the generation of solar and wind energy and we are carefully evaluating the business opportunities in the country, “he said.

The company, which bought at the end of 2017 a stake of the Apodi solar project in Ceará, which started generating power at the end of 2018 with a capacity of 162 megawatts, said it plans to reach 2030 with about 20 percent of its energy investments in renewables .

BP declined to comment, while Shell did not respond to requests for comments.

PETROBRAS –  LONG TERM FOCUS

Total and Equinor in Brazil have signed agreements with Petrobras to develop renewable energy.

Total said in December that a joint venture with Petrobras for solar and onshore wind in Brazil will seek to develop a portfolio of up to 500 megawatts of capacity over a five-year horizon.

Equinor signed a memorandum with the Brazilian state-owned company last September to begin evaluating offshore wind business opportunities.

But Petrobras’ new CEO Roberto Castello Branco recently said that the company has yet to assess whether it makes sense to direct resources to wind and solar projects.

“We, before investing in renewable energy, have to answer a basic question: do we have the skills to succeed in this type of business?” “Our competence, acquired over 65 years … is oil and gas exploration and production. Nothing indicates that we have the same advantages in the business of solar energy, wind power. So it’s a subject to research and it’s a long-term perspective, “he explained.

Asked about recent statements by Castello Branco, Petrobras did not comment immediately.

Despite the enormous potential, wind and solar power plants still do not have such an intense presence in the Brazilian matrix, where hydroelectric generation still predominates.

Wind power accounts for about 9 percent of capacity in the country today, while solar power is only 1.27 percent, according to the National Electric Energy Agency (Aneel).

The expansion, however, has been rapid. Wind farms have virtually gone from zero in 2009 to the current level of almost 15 gigawatts, while capacity at solar plants is expected to close 2019 at 2.17 gigawatts, up from 7 megawatts in 2012, according to data from the Brazilian Solar Energy Association.

Source: Reuters

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