Why Brazilian oil is well positioned in the market

Brazilian oil is well positioned to face the global effects of the energy transition, according to Roberto Ardenghy, the president of the local petroleum, gas and biofuels institute (IBP). 

"The outlook is for growth in investments in the country due to the increase in low-carbon oil production. Our oil is highly competitive in terms of price and greenhouse gas emissions," Ardenghy told BNamericas during the Offshore Technology Conference (OTC) in Houston. 

"When you look at the energy transition process, you can see that the oils that emit less gas will survive for longer," he said.

The IBP represents the main oil and gas producers, refiners and fuel retailers in Brazil. 

According to state-owned oil giant Petrobras, the per-barrel CO2 equivalent emissions of pre-salt oil, which accounts for almost 80% of national output, are up to 70% lower than the world average. 

The IBP president estimates that Brazil will need around US$30bn a year to develop known discoveries by 2032. 

Considering the midstream and downstream segments, annual capex could reach US$60bn. 

The figures could be even higher if the country moves forward with the exploration of new frontiers, such as the Equatorial Margin and the Pelotas basin. 

Ardenghy warned that the country risks having to import oil again if it does not make major new discoveries by 2032.

He stressed the importance of the commodity for the Brazilian economy, with exports currently at an average of 1.5Mb/d (million barrels per day).

"In the first three months of 2024, oil was the main export item in Brazil's trade balance, surpassing agribusiness. In other words, it's an extremely important product for the health of the country's external accounts," he underscored.

REFINING

Ardenghy considers Petrobras' resumption of investments in expanding refining to be positive, as is the development of private projects in the area. 

"Brazil can't be extremely dependent on imported fuels. There are times during the year when we import around 30% of the diesel and 18% of the gasoline we consume. These are very high levels," he said.  

He pointed out that there is currently a trend in the private sector to develop modular refineries. 

"These are small plants, with a processing capacity of between 20,000b/d and 40,000b/d of oil to serve certain niche markets, such as aviation kerosene or even diesel."