African authorities and major players wish to give preference to Brazilian service providers due to our exploration expertise in large offshore reserves
South Africa's Standard Bank Group Ltd encouraged Brazilian engineering and construction companies on Tuesday to explore African opportunities, such as the world's largest liquid natural gas projects in Mozambique. While President-elect Jair Bolsonaro says he will focus on relationships with advanced economies, Standard Bank is banking on Brazilian companies that need to diversify abroad to recover from a recession at home.
Brazilian companies in the preference of Africans
South Africa's biggest lender by assets serves Brazilian clients in Africa such as mining company Vale and Petrobras, and sees opportunities for others on the continent, particularly in two major LNG projects in Mozambique with a combined investment projected to be around $55 billion.
“Our objective today is to map out the benefits and scale of Mozambican opportunities for Brazilian clients,” Paul Taylor, the banks' global head of oil and gas, said in a telephone interview before meeting with Brazilian companies in Sao Paulo.
The two rival LNG projects developed by Exxon Mobil and Anadarko Petroleum will exploit large reserves found offshore, an area where Brazil has experience, and the gas will be liquefied on land, Taylor said.
Standard Bank Group, in which the Industrial and Commercial Bank of China (ICBC) is the largest shareholder with a 20 percent stake, financed Brazilian food exports to Africa and is advising Brazilian companies on mergers and acquisitions on the continent.
Strategy development
Natalia Dias, the bank's president in Brazil, said its Brazilian clients are trying to develop a more international business strategy after the recent crisis in Brazil, and it is still too early to see what Bolsonaro's policies will be once he takes office on Jan. “This is our bet. We still need to see what key measures the new government will take regarding foreign policy. We need to wait and see what the drivers will be,” she said.
Africa is a relevant market for Brazil that will continue to grow, not only for companies building roads, bridges and ports, but also for Brazilian food exports.
With 60% of all arable and uncultivated land in the world and similar soil conditions, Brazilian agribusiness companies should look to produce in Africa to protect their market share, Dias said.
Bolsonaro's energy plan captivated the market
Bolsonaro has presented a policy plan for his potential government as well as a review of the country's production sharing regime for the pre-salt fields. The plan has reinforced expectations that Bolsonaro is likely to continue with reform efforts that have attracted investment from heavyweights such as BP, Equinor, ExxonMobil, Shell and Total. Learn more about these reforms here.
