2/14/22, 7:22 PM BNamericas - How Patria Investiments sees the energy sector

Q&A BRAZIL OIL & GAS ELECTRIC POWER

How Patria Investiments sees the energy

sector
Published: 02/11/2022

Transmission Capacity Wind Private Equity and Asset Management Natural Gas Generation Gas Processing Energy Storage
Photovoltaic Mini Hydro Tenders Green Hydrogen Gas pipelines Run of the river Electric Power Producer Offshore Wind
Onshore Wind Transmission Lines Clean Energy Transition

Brazil’s Patria Investiments is the largest alternative asset manager in Latin America, handling some
US$26bn.

One of its main targets is the energy sector, where it plans to develop new projects in Brazil and other
countries in the region.

The focus includes renewable energy generation and natural gas, including processing units and
pipelines.

In this interview, the energy head of the group, Marcelo Souza, talks about Patria’s main projects and
the business outlook.

BNamericas: How do you evaluate the scenario for investments in oil, gas and electric power in Brazil?

Souza: As infrastructure investors, we invest in electric power, especially in generation and

transmission, with a strong focus on renewables and gas-fired plants. We believe that gas is a transition
fuel, displacing dirtier generation, such as coal and diesel. So they’re important assets, and gas
pipelines and UPGNs [natural gas processing plants] are also markets in which we can invest.

Brazil is a country that, despite volatilities, like currency and political issues, has a very robust regulatory
and institutional environment that allows us to continue investing in these various sectors.

Generation and transmission have a lot of growth to come. The volume of investments required for their
expansion are very robust, just look at the EPE [federal energy research company] studies, mainly when
it comes to renewables and natural gas.

BNamericas: How is the group targeting its portfolio in the country, given the energy transition process
and the ESG agenda?

Souza: ESG is a priority for us. We’ve been practicing ESG policies for many years and increasingly it
has been a very representative aspect in all our actions. We have a very well-designed governance
structure, with relevant treatment of social and environmental aspects. We’re always improving these
processes, because investing in infrastructure in Brazil and Latin America is focused on new
infrastructure, with assets that can improve people's lives.

BNamericas: In January, you acquired nine run-of-river hydroelectric plants from Contour Global. Why
the bet on hydroelectricity, considering the environmental licensing hurdles in Brazil?
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Souza: I’d rather not comment on the transaction, as its closing is still subject to certain conditions. But
we believe that well-structured hydroelectric projects, small hydros in particular, with well-designed
socio-environmental quality, are indeed a focus for us. It’s part of the renewable matrix.

BNamericas: Does Patria have an appetite for new acquisitions, whether for hydroelectric ventures or
those based on other energy sources?

Souza: Yes, we’re always very attentive to good business opportunities. Our main focus is on
developing new infrastructure, greenfield assets, but good acquisition opportunities are always
analyzed as well.

BNamericas: Are you also planning to participate in [regulator] Aneel's generation and transmission
auctions? The A-4, for generation, is scheduled for May.

Souza: Yes, we are interested. In renewable generation we’re always willing to sign contracts in the
regulated market. But there’s also a lot of appetite for contracts in the free market. About the A-4, we’re
going to study the public notice in detail. We monitor all the auctions. If it makes sense, we may bid.

BNamericas: How are the projects of Essentia Energia, which was created by Patria in 2019, going? Is
Sol do Sertão already for full operations? You are also building a wind power plant, right? What’s the
timeline?

Written by: Souza: Sol do Sertão [in Bahia state, with 475MWp of installed capacity and an investment of 1.4bn
Joao Montenegro reais, about US$270mn], started commercial operations in October 2021. It’s operating very well, with
top-of-the-line equipment. At the peak, there were 1,600 workers on the site, amid the COVID-19
pandemic, and it was challenging. In addition, we needed to bring in more than 1mn solar panels from
China, which will occupy an area of 1,000ha. A gigantic magnitude. It’s the second largest solar park in
Brazil, and the third largest in Latin America.

Regarding the wind project [Ventos de São Vitor, with 465MW of installed capacity, also in Bahia], won
in an Aneel tender in September 2019, it’s progressing well, and is expected to go into full operation at
the end of this year, with ramp-up in the middle of this year. Financing for the projects is already
contracted.

Through Essentia we continue to work on good opportunities. Growing in renewables is very important,
we’re considering new projects both in Brazil and [elsewhere in] Latin America. This regional expansion
is very important, so we keep looking for opportunities in renewables and electricity in general.

BNamericas: How is construction progressing of the Marlim Azul thermoelectric plant? Will the gas that
will supply the plant be from the pre-salt from the beginning? Or will LNG also be an option?

Souza: The gas will be supplied by Shell from its pre-salt fields, through the Rota 2 pipeline, reaching
Cabiúnas [Tecab terminal, in Macaé]. And Shell gave us a long-term contract for the supply. The
construction is progressing well. The regulatory contract starts on January 1, 2023. There’s still a lot of
work ahead, but we’re on track to meet the regulatory deadlines.

BNamericas: Are you considering getting into other natural gas projects?

Souza: Yes. We’re working to expand our presence in this market. There’s a big market coming up.
Brazil needs generation, since renewables, which are growing a lot, are intermittent, demanding gas-
fired plants [to assure supply when there is less wind or sunlight]. It’s important that authorities think
about strategies to bring gas from the pre-salt to supply the Brazilian thermoelectric park.

BNamericas: Companhia Brasileira Offshore [CBO], acquired by Patria in 2013, has been investing in
growing its offshore support fleet. What are the prospects for this segment?

Souza: Before we acquired CBO, we had an integrated maritime support platform, called Oceana. We
even built vessels in our shipyard, in Santa Catarina. Since then, CBO has been expanding the fleet and
winning several awards for operational excellence. It’s a market that’s growing a lot and needs marine
support infrastructure.

Editor's note: On February 10, CBO announced the acquisition of a platform supply vessel (PSV) with
5,000 of deadweight tonnes. Dubbed CBO Wiser, it is the 42nd vessel to be integrated into the firm’s
fleet. It was developed with equipment from Finnish company Wärtsilä and has technical specifications
that allow it to operate in ultra-deep waters, such as the Brazilian pre-salt.

BNamericas: Are you studying opportunities in the green hydrogen, offshore wind and battery markets?

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Souza: Without a doubt, they’re all topics that make total sense, aligned with what we need in the
energy market.

Green hydrogen is an irreversible trend, although today it’s still a less viable solution, and needs
important developments in technology and commercial issues to see large-scale projects coming off
the drawing board. We’re looking to understand value drivers to position ourselves there.

Batteries are developing faster. It’s becoming a relevant component along with renewable projects to
achieve more perennial [continuous] generation, taking away some of the volatility and seasonality of
the [solar and wind] technologies.

Offshore wind is already a reality in several locations around the world. Brazil will see big growth in
onshore wind before seeing growth in offshore wind. But given the local characteristics of offshore wind
and the steps the government is taking with regulation, I believe this will become a reality in the
medium term.

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Ventos de São Vitor 1 wind farm (São Vitor Complex)

Updated 10 days ago

Marlim Azul thermo plant (ex Vale Azul II thermo plant)

Updated 5 months ago

Agência Nacional de Energia Elétrica

Updated 3 days ago

Essentia Energia Renovável Spe Ltda.

Updated 4 months ago
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2/14/22, 7:22 PM BNamericas - How Patria Investiments sees the energy sector

Pátria Investimentos Ltda.

Updated 4 months ago

Empresa de Pesquisa Energética

Updated 8 months ago

Shell Brasil Petroleo Ltda.

Updated a year ago

Joao Montenegro
Updated a year ago

Monthly average oil export value

Updated 17 days ago

Production of natural gas

Updated 17 days ago

Electricity generation. Monthly data

Updated a month ago

Maximum demand. Monthly data

Updated a month ago

Installed capacity of Electric power generation by source

Updated 2 months ago

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