Luciana Magalhaes and Jeffrey T. Lewis, WSJ

BRASILIA
EnergiesNet.com 03 18 2022

Oil companies operating in Brazil intend to boost production this year after the Russian invasion of Ukraine sent crude prices higher, according to Mining and Energy Minister Bento Albuquerque.

Companies including state-controlled Petroleo Brasileiro SA, or Petrobras, Shell Plc, Total Energies SA, Equinor ASA and Galp Energias SGPS SA have all indicated their willingness to speed up production projects in the country, he said. The minister said he can’t say by how much output will grow, or how soon, because that depends on the oil companies’ plans.

“All of them want to do it,” Mr. Albuquerque said in an interview. “The companies have signaled (their intention to increase production this year), not out of good will, but because the market is attractive.”

Brazil is currently one of the world’s biggest oil producers, with output of about 3 million barrels of oil per day in January, and Petrobras is the single biggest producer in the country. The state-controlled oil company has been boosting output from its rich deepwater and ultra-deepwater deposits off the coast of Rio de Janeiro and Sao Paulo states.

Russia was the world’s third-biggest crude producer in January, after the U.S. and Saudi Arabia, according to the International Energy Agency, but that country’s attack on its neighbor Ukraine has disrupted that supply.

Mr. Albuquerque said he spoke with U.S. Energy Secretary Jennifer Granholm last week, and that she asked him to increase the country’s oil production to help bring supply and demand into balance.

“I told her Brazil has already increased production in the past few years, even during the pandemic. Investments are happening, and will keep happening, but I said I’ll talk to those companies,” Mr. Albuquerque said of his conversation with his U.S. counterpart.

The impact of the war threatens a supply shock that could slow world economic growth and push energy prices higher unless output increases elsewhere, the IEA said Wednesday. Demand will outstrip supply as early as the second quarter of this year unless members of the Organization of Petroleum Exporting Countries boost production, the IEA said.

OPEC countries have so far resisted pressure from the U.S. and allies to help make up for the shortfall, though the United Arab Emirates said last week that it plans to push other members to lend a hand.

After the price of crude spiked briefly to over $139 on March 7, the highest since 2008, Petrobras pushed the wholesale price of diesel fuel up by 25%, and of gasoline by 19%, angering Brazil’s truck drivers and Brazilian President Jair Bolsonaro.

Mr. Bolsonaro said earlier this week that he can’t interfere directly in Petrobras’s operations, but he can make changes to the company’s top management, and Mr. Albuquerque echoed those remarks Thursday.

A year ago Mr. Bolsonaro replaced the company’s respected chief executive officer, Roberto Castello Branco, with army general Joaquim Silva e Luna amid a disagreement over the company’s fuel price policies.

Luciana Magalhaes at luciana.magalhaes@wsj.com and to Jeffrey T. Lewis at jeffrey.lewis@wsj.com

wsh.com 03 17 2022