Brazil could lose 15bn barrels of oil reserves due to price crisis

Brazil's oil recovery volumes could fall by 15Bb (billion barrels) due to the prolonged drop in oil prices caused by the decrease in world consumption due to the coronavirus pandemic and a supply glut, according to a study by consultancy Rystad Energy.

More pre-salt reserves will likely be left in the ground, becoming lost recoverable sources.   

“The COVID-19 downturn will expedite peak oil demand, putting a lid on exploration efforts in remote offshore areas and as a result reducing the world’s recoverable oil by around 282 billion barrels,” the consultancy said in a statement.   

The latest data from Brazilian regulator ANP show that at the end of 2019 the country had 12.7Bb of oil and 365Bm3 (billion cubic meters) of gas in proved reserves (1P), a 4% drop compared with 2018. Considering proved, probable and possible (3P) reserves, the volumes amounted to 21.8Bb of oil and 550Bm3 of natural gas, down 8% compared to the previous year.   

Before the crisis, the country expected to see an increase in reserves in the coming years due to state-run Petrobras’ assets sale program, which would attract more private firms and raise investments in older fields. There were high expectations for efforts to improve oil recovery and seek new discoveries within those areas. The positive results of the exploration tenders held in 2017-19 had also raised expectations of new discoveries.   

Adriano Pires, the president of consultancy company CBIE, believes that Brazil needs to speed up efforts to take advantage of its natural resources as the current crisis will accelerate the energy transition.   

“Brazil needs to speed up auctions and build policies to attract companies. Otherwise, Brazilian society is at risk of not benefiting from those oil resources. Oil underground is worth nothing to society,” he told BNamericas.   

Other countries in Latin America should also see impacts on reserves from the downturn. With no normalization in sight, Rystad says Venezuela’s actual reserves will potentially fall by 21Bb. Meanwhile. Mexico's reserves could drop by 14Bb, as the consultancy believes the country will likely see reduced exploration for deepwater and shale oil reserves.