China Grows in South America by Buying Brazil’s Only Private VLCC Terminal

China continues to grow its influence over South America with China Merchants reporting an agreement to buy Brazil’s only privately operated VLCC terminal. The company reports the deal is part of its continued growth in the Latin America region and further consolidates its position globally.

China Merchants Port Holdings Co. reported on February 28 that it completed an agreement calling for it to acquire 70 percent of Vast Infraestrutura, operator of the onshore crude oil transshipment terminal in the Port of Açu. It is an industrial deep-water port that is within 24-hour sailing distance of Brazil’s major offshore production fields. It is the only terminal capable of handling Very Large Crude Carriers (VLCCs) that is not operated by Petrobras. 

The deal calls for an initial payment of approximately $448 million but not to exceed $714 million based on adjustments for cash and other considerations. There are also milestone payments of $56 million contingent on operating licenses being received by the end of 2026 and 2027 and potential earn-out payments of approximately $160 million based on the five-year performance to the end of 2029.

China Merchants reports it has been actively exploring new growth drivers for its existing ports business. This deal coupled with the 2017 acquisition of TCP Participaçoes, the Brazilian container terminal operator, will enhance China Merchant’s regional strategy. 

U.S.-based EIG Global Energy Partners is the primary investor in the parent company of Vast which started the terminal a decade ago in 2015. The terminal started with large agreements with Shell and other energy majors.

The newly acquired terminal handles approximately 30 percent of Brazil’s crude oil exports which are shipped through the facilities located north of Rio de Janeiro. The terminal averages 560,000 barrels per day. It currently has a licensed capacity of 1.2 million barrels per