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Brazil may be big exporter of oil, says executive

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The country will produce 5.2 million barrels of oil (oil and gas) per day in 2026, but will only have the capacity to refine 2.2 million barrels

Brazil may be one of the five largest oil exporters in 2026. The director of Petroleum, Gas and Biofuels Studies of the EPE (Energy Research Company), José Mauro Ferreira Coelho, is predicated on the combination of growth in production with lack of expansion of the refining area in the country.

Ele disse que o aumento da produção tem se repetido e a perspectiva é que prossiga neste ritmo nos próximos anos. Estudos da EPE indicam que, em 2026, o país vai atingir 5,2 milhões de barris de petróleo (óleo e gás) por dia, enquanto o parque de refino tem capacidade de processar cerca de 2,2 milhões de barris.

“What we see in the horizon of ten years is a difficulty in new refining investments and that we will be exporting something around 3 million barrels of oil in 2026. Besides being a major producer, which is already very important, we will be a major exporter, exporting 3 million barrels of oil per day. This will make Brazil one of the five largest oil exporters in the world. Quite possibly we will only be behind at the export level of Saudi Arabia, Russia, Iraq and Canada, “he said in an interview with Agência Brasil.

Currently, Brazil is one of the ten largest oil producing countries. According to figures International Energy Agency, with the average daily production in 2017 of 3.2 million barrels of oil (oil and natural gas in oil equivalent, which is called a barrel of oil equivalent – boe), in addition to entering the group and occupying the ninth place, Brazil surpassed Kuwait, one of the members of OPEC (Organization of Petroleum Producing Countries). Kuwait recorded production of 3.1 million barrels in 2017.

“Without a doubt, Brazil will still have a much bigger share in this world of oil than what it currently has and what is being projected by the International Energy Agency for 2018. It may increase more in the ranking,” said the Director of EPE .

With this ranking, Brazil begins to have a relevant importance in the global geopolitics of petroleum. “Of course, this impacts the international oil market and, consequently, impacts the price of a barrel of oil. Then, within the producing countries, Brazil begins to have a greater importance in the game of oil in the world, the price of oil in the world and also in this balance between supply and demand of oil, “he said.

The executive stressed, however, that since it is not part of OPEC, Brazil does not have to submit to the limits adopted by members of this group. “They impose limits on export quota quotas. As Brazil is not part of this association, it has no established export quota limit. Brazil does not have to talk to anyone about its oil production or its oil exports, which it thinks to produce or export, “he added.

According to José Mauro, Brazil’s relevance in the world oil market will increase when the country becomes one of the five largest exporters. For him, effectively, what moves the international oil market is not the amount of production, but the country’s ability to put oil in the world to be sold.

“It’s no use to be a great producer and also a great consumer. So I do not put oil in the world to be traded, but when I am a major exporter, I have significant influence on the oil market, even influencing oil prices, “he said.

While saying that it is up to the federal government to carefully evaluate Brazil’s interest in integrating OPEC, it does not see a need for the country to join the group at this time. “This has to be measured calmly at the ministerial level.”

According to the director, the lower risk in exploring the pre-salt area attracts more companies to invest in projects in the region, which contributes to the increase in Brazilian production.

“These pre-salt reserves, besides being of low exploratory risk, are areas of large volumes. In fact, this greatly increases the attractiveness of international companies in investing in Brazil in the area of ​​exploration and production. Another factor is the legal and regulatory security that exists in Brazil, unlike other oil-producing countries, “he said, adding that the schedule of exploratory block auctions maintained by the federal government also favors the investment environment.

“I think this also gives a positive signal to companies operating in the sector that Brazil has a predictability in relation to this oil and natural gas production activity in the country. This ends up mobilizing not only Petrobras but also other international companies, “he said.

Even with positive prospects, the director warned of the need for the country to invest more in refining parks to reduce the import of derivatives such as LPG, naphtha, diesel, aviation kerosene and gasoline.

According to EPE, in 2017 were 547 thousand barrels / day. In the previous four years, only in the recession years 2015 (362 thousand barrels / day) and 2016 (430 thousand barrels / day) there was a lower level. In 2013, there were 439 thousand barrels / day and, in 2014, 442 thousand barrels.

In the first four months of 2018, 179 thousand barrels / day of derivatives were imported. According to the EPE calculations, the year should close with imports of approximately 535 thousand barrels / day.

“We have a refining park that is not capable of processing all the oil we produce. We should have more investments in refining in Brazil so we could supply the national derivatives market without importing, “he said.

The director also noted that in the next ten years the import of derivatives can reach 800 thousand barrels / day, especially diesel. The outlook poses a challenge to the need to raise investment in refining.

According to the executive, today 98% of the national park is owned by Petrobras, which is prioritizing investments in the oil exploration and production area where there is a higher return, but new studies are being done to increase investments in refining.