06/11  Closing Prices / revised 06/12/2024 07:53 GMT 06/11 OPEC Basket  $82.36   +$1.43 cents 06/11 Mexico Basket (MME) $72.63  +$0.43  cents  | 04/30 Venezuela Basket (Merey)   $74.91   +$3.93 cents | 06/11 NYMEX WTI Texas Intermediate July CLN24 $77.90  +$0.16 cents  | 06/11 ICE Brent August  BRNQ24    $81.92  +$0.29 cents  | 06/11 NYMEX Gasoline June RBN24  $2.40  +0.1%  |  06/11 NYMEX  Heating Oil July  RBN 24    $2.42  +0.3% | 06/11 Natural Gas July NGN24  $3.12   +7.7%  | 06/07 Active U.S. Rig Count (Oil & Gas)   594  -6  | 06/12 USD/MXN Mexican Peso   18.6503  (data live)  | 06/12 EUR/USD     1.0745 (data live)  | 06/12 US/Bs. (Bolivar)   $36.43850000 ( data BCV)

Brazil’s oil, gas output to head higher amid ongoing energy transition – Platts

Lula oil field, previously known as Tupi oil field, is one of the world’s biggest producing ultra-deepwater oil and gas fields located in water depths from 2,000m to 5,000m in the Santos Basin, approximately 250km off the coast of Rio de Janerio, Brazil.
Lula oil field, previously known as Tupi oil field, is one of the world’s biggest producing ultra-deepwater oil and gas fields located in water depths from 2,000m to 5,000m in the Santos Basin, approximately 250km off the coast of Rio de Janerio, Brazil.(MODEC)

Jeff Flick, Platts S&P Global

EnergiesNet.com 01 08 2024

Brazil is expected to continue to boost oil and natural gas production in 2024 amid the ongoing development of offshore fields, but a shift in energy policy strategy back toward a state-led model under President Luiz Inacio Lula da Silva and his Workers’ Party (PT) has renewed uncertainties about future growth.

The ramp-up of four new floating production, storage and offloading vessels (FPSOs) installed since December 2022 powered a series of oil and natural gas production records throughout 2023 and should continue into 2024, according to government and industry officials.

Oil companies operating in Brazil pumped an average 4.285 million b/d of oil equivalent in the first 10 months of 2023, a 2.2% increase from the previous record 4.194 million boe/d pumped in 2022, according to data from the National Petroleum Agency (ANP).

State-led oil company Petrobras also plans to pump first oil from the FPSO Sepetiba in December, which will be the fifth FPSO to enter operations over the past 12 months. The FPSO Sepetiba which will be the second production unit installed at the Mero field in the Libra production sharing area.

Production growth, however, will come at a softer pace in 2024, according to Petrobras’s $102 billion 2024-2028 investment plan.

Petrobras and its partners plan to develop a single FPSO in 2024: the Marechal Duque de Caxias, which has installed capacity to produce 180,000 b/d.

Petrobras, Brazil’s top oil producer and the leading acreage holder in the prolific subsalt region, expects to produce 2.8 million boe/d in 2024, in line with 2.8 million boe/d in 2023, according to the company.

The company, however, had previously raised its 2023 production target after several of the new FPSOs reached full output capacity in record time.

But Brazil’s positive production outlook belies market and regulatory uncertainties that could undermine the country’s ability to meet its output potential.

The Lula administration started to roll back some of the oil industry reforms implemented since 2016, including an overhaul of top management and the board of directors at Petrobras that will likely return the company to a dominant position in Brazil’s energy sector.

The changes included a new domestic fuel-pricing policy and a pending review of two key antitrust agreements signed in 2019 that ended Petrobras’s monopoly in Brazil’s refining and natural gas segments.

Petrobras ended its use of import-parity pricing for diesel and gasoline in May, shortly after the management and board shakeup. The move closed arbitrage windows for third-party importers that have historically accounted for about 25% of the country’s diesel demand and 15% of gasoline consumption, raising concerns about potential supply shortages.

The new price policy focused on topping clients’ best supply alternatives and increasing market share while, at the same time, boosting domestic refinery output to levels not seen since 2015, according to Petrobras, which operated refineries at 95.8% of capacity in the third quarter of 2023.

Petrobras also ended plans to sell off four refineries under the 2019 antitrust agreement, with the National Energy Policy Council (CNPE) revoking authorization of the sales at Lula’s behest.

The CNPE is the government’s lead policymaking body for energy matters. The decisions likely cement Petrobras as Brazil’s leading refiner, ending efforts to diversify supply to the world’s fourth-largest transportation fuels market.

The Lula administration also tasked Petrobras with leading the energy transition, with outlays of $11.5 billion earmarked for low-carbon and renewable energy projects over the next five years. Petrobras will focus on offshore wind and solar, according to the company.

Regulatory regimes

Brazil, however, still needs to hammer out regulatory regimes for offshore wind power and green hydrogen initiatives. Bills related to the two sectors have been debated in the country’s Congress.

Final details on tax breaks, however, will not be hammered out until complementary bills are passed in 2024.

The tax reform bill, however, could undercut Brazil’s ability to compete for traditional energy investments, according to industry officials. The bill included a selective tax of up to 1% on oil production, which could be extended to other goods and services that undermine ‘health and the environment’.

The CNPE also increased local content requirements to develop offshore exploration and production blocks sold at future concession and production sharing auctions, part of efforts to bolster the country’s oilfield services industry.

Onerous local content requirements were also part of previous Lula administration and PT policies, which critics say led to cost overruns and development delays.

The move could further dampen already lackluster interest in future Open Acreage sales, especially under the production sharing regime.

The CNPE expanded the number of subsalt production sharing blocks included in the Open Acreage portfolio to 15 in December, the portfolio’s first major expansion since December 2021. While the Open Acreage concession sales have proved popular with oil companies, Brazil sold just one of the six subsalt blocks up for bid at an Open Acreage production sharing sale held Dec. 13.

The disappointing production sharing sale renewed calls to eliminate the subsalt polygon that requires the contracts for development, but a change to the regulatory regime would require congressional action, ANP Director General Rodolfo Saboia said.

“We can think about it, but I do not know if there is a chance that this happens in the near future,” Saboia said after the Dec. 13 sale.


spglobal.com 01 05 2024

Share this news

Support EnergiesNet.com

By Elio Ohep · Launched in 1999 under Petroleumworld.com

Information & News on Latin America’s Energy, Oil, Gas, Renewables, Climate, Technology, Politics and Social issues

Contact : editor@petroleuworld.com

CopyRight©1999-2021, EnergiesNet.com™  / Elio Ohep – All rights reserved

This site is a public free site and it contains copyrighted material the use of which has not always been specifically authorized by the copyright owner.We are making such material available in our efforts to advance understanding of business, environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have chosen to view the included information for research, information, and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission fromPetroleumworld or the copyright owner of the material.

Scroll to Top