Brazilian Oil & Gas Report

​The Brazilian Oil & Gas Report is an annual publication, whose purpose is to outline the sector's trends and developments over the past months in Brazil.

The report sheds light on the explanations for fluctuations in prices, outputs, commerce and demand. The objective is to reduce energy information asymmetry to promote sound policymaking.

Brazilian Oil & Gas Report 2022/2023

​The latter part of 2022 was marked by significant price volatility, driven by a combination of external and internal factors. Nevertheless, fuel demand continued to expand, aligned with resumption of economic growth as the economy normalized after Covid-19 disruptions. Exploration and Production (E&P) activities had a surge in investments, caused by both regulatory and economic incentives. The mid- and downstream sectors also had an influx in capital, to guarantee supply and logistics due to the demand growth. Price formation gained more visibility, especially due to changes in taxation and in government program RenovaBio.

There are significant changes in early 2023. Taxes on oil products had been either reduced or suspended altogether to manage inflation (stemming from consistently high international oil prices) and were gradually reinstated over the year. Another moviment was Petrobras' new oil products pricing policy. The company maintained the alignment with international prices but introduced some considerations about their domestic costs into the calculus, such as fuel opportunity costs. The company's natural gas pricing policy was modified as well. Petrobras also has changed its strategies concerning the energy transition, downstream participation shares and its divestment program. Instead of focusing on oil and production from its main fields, its objective is diversify investments and scope. Also, an important bid round, 1st Production Sharing Open Acreage cycle, took place and a new record domestic oil production was attained in the first half of 2023.

Brazilian Oil & Gas Report 2021/2022

​The Covid-19 pandemic had a considerable impact on Brazilian oil and gas demand, affecting investments in the sector. However, the economy has been recovering, with demand coming very close to its previous peaks, even with air transport and mobility still lagging.

Oil and fuel prices have increased considerably in the first half of 2022, mainly due to the ongoing conflict between Russia and Ukraine, but also because of a stronger than forecast global demand growth. Domestically, retail prices also rose significantly. Ultra-low Sulphur diesel oil (ULSD) went through the sharpest increase, with 42%, while gasoline rose 8%, and liquefied petroleum gas (LPG) rose 10%, on average.

The oil sector's mid- and downstream is also undergoing changes. Petrobras' refinery divestments were delayed by the pandemic, but have overcome all the necessary hurdles, resulting in the completion of the sale of four out of eight refineries. Once completed, these divestments are expected to stimulate other market participants to invest in the modernization of these refineries, and also in new maritime terminals, pipelines and railways. This investment is needed to support Brazil's growing fuel demand, as per capita income increases. Players have started committing resources to infrastructure, and even more investments are expected over the next few years.

The natural gas sector is in the midst of a structural transformation and evolved considerably after the promulgation of the New Gas Law. Companies started to become operators and to diversify their activities and investments. This is mainly to progress in the discussions about third-party access to essential facilities, which will stimulate competition and more investments.

Brazilian Oil & Gas Report 2020/2021

The Covid-19 pandemic had a considerable impact on Brazilian oil and gas demand, affecting investments in the sector. However, the economy has been recovering, with demand coming very close to its previous peaks, even with air transport and mobility still lagging.

Domestic oil and gas production has not recovered previous peaks yet, but new FPSOs are already being developed, and several have recently been given FIDs. Petrobras and other majors are announcing record investments in pre-salt fields, even while investments in other countries are still lagging. Improvements in the bidding process, competitive assets, resilient projects, world-class resources and legal security allowed Brazil to consider new licensing rounds. Given these developments, EPE forecasts a considerable growth, with the country's production expected to reach 5.2 million b/d of oil and 1.6 million boe/d of natural gas in 2030.

The natural gas market is undergoing an opening process that is attracting ever more competition, players and new investments. New companies started operating and diversifying its activities, and third party access has also become more widespread, allowing more companies to use Petrobras' infrastructure, which in turn stimulates more supply, promoting more demand. Combined with LNG imports becoming more relevant, and pre-salt pipelines allowing more natural gas to reach Brazil's shores, the market is bound to increase in size and efficiency. The refining sector is also becoming less concentrated, with Petrobras completing the divestment of two out of eight refineries put on sale. These transactions should contribute to accelerate improvements in Brazilian refining, leading to more investments.

Brazilian Oil & Gas Report 2019/2020

Despite a challenging international market environment, Brazil's oil and gas industry remains on track to accomplishing its potential to become a major global player. The breakout of the global Covid-19 pandemic did temporarily dim expectations, but relatively low development costs and interest in the medium sour barrels and low-Sulphur fuel oil produced from pre-salt streams allowed the country to quickly ramp up production again, and for Brazil's upstream to keep breaking records.

The country's midstream also underwent significant changes. Petrobras, Brazil's state-owned company, has been mandated to sell half of its refineries, and most of its natural gas distribution assets. A new gas market, enshrined by law, and these divestments are promoting a more diversified and competitive natural gas and products market. The pandemic hit fuel and gas demand especially hard. But demand recovered relatively quickly, initially due to increased commodity exports, that stimulated diesel demand. Subsequently economic activity recovered, and is expected to keep increasing over 2021.

Brazilian Oil & Gas Report 2018/2019

Brazil is increasingly consolidating itself as a major player in the oil industry. Domestic crude production has hit new record highs, in line with expectations associated with Pre-salt's development.

A series of measures by the Brazilian Government started to increase attractiveness upstream, and to promote several final investment decisions. This helped improve fields' decline rates, and to accelerate field developments. In the downstream segment, the focus is to increase competition and to reduce possible bottlenecks to Brazil's growth.