Parnaiba seeks expansion amid downturn

RIO DE JANEIRO (Bloomberg) -- Parnaiba Gas Natural SA, Brazil’s biggest independent natural gas producer, is considering acquisitions and preparing to expand output in Latin America’s biggest economy.

The Rio de Janeiro-based producer spent 800 million reais ($223 million) last year to expand infrastructure and drill 30 wells in what was Brazil’s biggest drilling campaign on land, CEO Pedro Zinner said in an interview. This has put the company on track to nearly double output to 8.4 MMcmg (297 MMcfg) in July, and it is looking to expand further, he said.

“We’re always looking at opportunities,” said Zinner at the company’s office in Rio. “We’ll see a lot of stranded assets.”

State-controlled Petroleo Brasileiro SA is looking to divest assets ranging from pipelines to offshore oil fields in an effort to ease the biggest debt load in the oil industry and withstand the worst oil market in a generation. Apart from potential acquisitions, Parnaiba also plans to hunt for more gas deposits at seven concessions it won in October. It plans to start using seismic technology next year to map the geology and decide on drilling sites, he said.

Last month energy producer Eneva SA, which owns 27.3% of Parnaiba, signed an agreement with the company’s other main shareholders to incorporate it as a subsidiary. Brazil’s antitrust regulator, Cade, approved the deal last week, and it still needs to be approved at a shareholders’ meeting. Parnaiba will feed its expanding gas production to Eneva’s power plants, which are some of the most efficient in Brazil, Zinner said.

“Upstream will be the growth arm of the new entity,” Zinner said. “It’s been a good year despite all the turbulence.”