Brazil cannot add oil to the market
During this decade, Brazil plans to gradually add 3 million barrels a day of oil and gas to its production, but cannot accelerate those plans to compensate for the ban on Russian oil, the principal told Reuters. oil regulator Rodolfo Saboia last week.
One of the largest and fastest growing non-OPEC oil producers, the South American country is expected to pump significantly more oil over the next two years as buyers seek supplies to replace Russian crude blacklisted following his invasion of Ukraine.
Global demand for crude is around 100 million barrels per day. The spread of Russian supply bans since its invasion of Ukraine could push oil prices even higher. Russia, which calls its action a “special operation”, is supplying around 7 to 8 million barrels a day of crude oil and products.
This month, US Energy Secretary Jennifer Granholm called her Brazilian counterpart to demand faster increases, Brazil’s energy ministry said. The United States has also reached out to producers in the United States, Venezuela and the Middle East.
Brazil’s geology and supply chain constraints mean that bringing new projects into production can take up to 10 years, he said. Its oil comes largely from deepwater fields that require expensive subsea rigs and components, Saboia said.
“Production will increase, but there is not much that can be done to speed it up,” Saboia told Reuters. “There’s so much the industry can offer.”
State-controlled oil company Petrobras plans 15 large offshore production platforms by 2026, said João Henrique Rittershaussen, Petrobras’ production director. The 15 will increase combined capacity by 2.425 million bpd of crude.
While most rigs are ready or under construction, only one – capable of pumping 180,000 bpd of crude – is expected to start this year, Rittershaussen said.
Five more with a combined capacity of 630,000 bpd of crude are expected to begin operations next year, he said. But the output is not instantaneous. “It takes almost an entire year to reach full capacity for a platform like this,” Rittershaussen said.
Brazil’s offshore oil fields supply 97% of the country’s production, according to regulator ANP. Total production is expected to reach almost 7 million bpd of oil and gas by the end of 2030, up from 3.94 million bpd in 2021, according to the government energy research body known as EPE.
Oil companies and their suppliers have increased their spending in Brazil in recent years. Investments have already climbed $1 billion this year compared to 2021 and are expected to hit $20 billion next year, according to oil industry group IBP.
Sanctions against Russia could further boost foreign investment, said IBP executive director Fernanda Delgado.
But, she warned, “It’s just not an instant process.”
(Reporting by Sabrina Valle; Editing by David Gregorio)