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.