Mergers and acquisitions are booming in Brazil’s energy sector.
There was 62% growth in M&A deals in the oil and gas sector and a 40% increase in electric power transactions in 2024, according to data from KPMG, and 2025 is expected to be another strong year.
In the oil and gas sector, small and medium-sized companies are driving this growth. One of the highlights was Brava Energia, which resulted from the combination between 3R Petroleum and Enauta in 2024 and recently sold onshore assets to Azevedo & Travassos and Petro-Victory.
Other upstream players involved in M&A operations last year include independent firms Perenco, Mandacaru Energia, Phoenix O&G and Petrorecôncavo, in addition to national oil company Qatar Energy and Brazil’s state-run giant Petrobras.
And this month, Petro-Victory and BlueOak Investments bought local onshore hydrocarbons producer Capixaba Energia.
Besides Brava, which is expected to move forward with divestments, companies like Carmo Energyand Seacrest are among potential sellers of assets in the short term, local sources told BNamericas, on condition of anonymity.
There has also been movement in the midstream and downstream areas, with activity on the part of companies such as Copa Energia Distribuidora de Gás, Ultrapar, Compass, Rede 7, Sim Distribuidora, Norgás, Energisa, Grupo Pão de Açúcar, Copel, Pluspetrol and TotalEnergies.
“The entire chain is very active. M&As are here to stay,” Paulo Coimbra, a partner at KPMG, told BNamericas.
He underscored that many of the world’s largest oil companies have announced a slowdown in investments in renewable sources, shifting back to increasing investments in oil and gas.
“So, we still see great potential for transactions to take place in the future.”
Regarding electric power, the distributed generation (DG) sector – characterized by the presence of many small and medium-sized companies – is expected to continue consolidating.
But large groups have also contributed to the growth in M&A transactions. They include Auren Energia, which bought AES Brasil and closed an agreement to acquire Esfera Energia.
Âmbar Energia, part of the J&F group, purchased several thermal plants from Eletrobras, while mining giant Vale concluded the acquisition of Aliança Energia in 2024.
The Shell–Cosan joint venture Raízen last year sold several PV solar plants to Élis Energia and Brasol.
Pátria Investimentos, Itaú, Casa dos Ventos and Statkraft are also among the names involved in M&A deals in 2024.
Rodrigo Borges at consultancy Aurora Energy Research says that M&As in Brazil’s power sector are gaining momentum as a result of increasing price volatility and rising average wholesale prices.
“After a period of subdued investment in renewables, investors have revived interest, particularly as expectations for long-term electricity prices improve, strengthening the investment case for new renewable projects with enhanced project economics,” he told BNamericas.
With increasing intermittent renewable capacity and rising climate risks, market volatility is expected to increase, driving heightened price fluctuations.
“This amplifies the need for more sophisticated modeling and robust hedging strategies to manage risk effectively,” Borges said.
The consultant also highlighted that energy storage is gaining traction as a tool for portfolio diversification in the face of issues such as curtailment.
“We’re seeing increasing demand for battery business models to prepare for the upcoming regulatory auction,” he said.
Another emerging trend is the impact of potential carbon pricing. As discussions regarding a carbon market begin to take shape, generators using fossil fuels are starting to assess how this could influence operations and revenues.
Read the full article at BNamericas
