This blog is designed to inform investors about business opportunities in Brazilian infrastructure projects. It covers energy, telecomm, mining, transportation, ports and airports greenfield and brownfield projects.
Its content is supported by official information and/or documentation gathered from news agencies, Brazilian regulatory agencies or other governmental entities.
This blog is updated upon new regulations on the areas covered by this blog are issued by Brazilian Agencies.
Oil & Gas: Private Sector accounts for 20% of the oil exported by Brazil.
11:57 PM (GMT -03:00) – Apr 21 2013
Private sector accounts for 20% of the oil exported by Brazil
By Rodrigo Pedroso | São Paulo
Foreign oil companies already account for 20% of Brazilian crude exports. Last year, when compared to 2011, these companies increased by eight percentage points their share of the crude oil exported by Brazil, contributing with $5.5 billion to the country’s trade.
Nelson Silva, with BG Brasil
Such increase is due to higher crude production by foreign companies, while Petrobras reduced its sales abroad by 15% because of higher domestic demand for fuels. Analysts consider that foreign companies will continue to increase their share of exports over the next few years.
Data from the Ministry of Development, Industry and Trade show that even with these shifts, Petrobras continues being the top exporter by a wide margin. Of the $27.8 billion exported by oil companies last year, $22.1 billion were by the state-owned giant. It was a 3.5% smaller value than in 2011, while foreign companies sold 38% more in dollar terms. Another Brazilian company with oil wells, OGX, exported $172 million in its first year of exploration. Such numbers take into account sales of crude and oil products.
A double industry trend has taken shape in the country over the past two years. Growing domestic demand for fuels means Petrobras was forced to use more crude for refining, weakening exports. Meanwhile, its production is stagnant. Through a spokesperson, Petrobras said its prospects for this year are of “daily production of 2 million barrels a day, with variation of up to 2% more or less.” Last year, for example, the state company produced 2% fewer barrels of crude and increased the refining volume by 4.5%, thus using part of the crude that was before destined to exports.
Foreign companies, which started to buy blocks to operate in the pre-salt fields in 2008, are starting their production, which closed last year at around 200,000 barrels a day, says Adriano Pires, director of the Brazilian Infrastructure Center (CBIE). “The oil extracted by these companies is mostly exported, since there’s a bigger price incentive in international markets. The numbers are small compared to those of the state company, but for those who were not producing and were exporting nearly nothing a few years ago, the results are good,” he says.
According to the ministry’s figures, Shell was the top exporter in 2012: $1.4 billion, 34% more than in 2011. But four companies at least tripled their sales abroad: Statoil ($1.2 billion), Sinochem ($808 million), BG Brasil ($667 million) and GE Oil ($292 million).
Higher exports match these companies’ increased activity. Norway’s Statoil was the second largest oil producer at the end of December, with average production of 45,000 barrels a day (20% more than a year earlier), followed by Shell, with 32,000 barrels.
After ending last year with average daily production of 28,000 barrels, this year BG Brasil is producing 39,000 barrels a day after starting operations of its second oil rig, Cidade de São Paulo, in the Santos Basin. For this year, a third platform is slated to get into operation in May in Paraty, Rio de Janeiro.
With these plans, the British company expects to end 2013 as the second largest oil producer in Brazil, after Petrobras. “In 2014 another two platforms will get into operation,” says President Nelson Silva.
BG expects to reach 2020 producing 600,000 barrels a day in Brazil, which would account for almost half of its overall production. “It was taken a decision last week that the country is responsible for the entire South American region for BG,” Mr. Silva says.
The decision is based on the prospect of relevant Brazilian output growth in a horizon of economic and legal stability for the sector. In addition to Brazil, BG operates in South America in Bolivia and is prospecting areas in Uruguay.
The policy of crude and oil-product prices in Brazil means foreign companies will tend to increase their exports in the medium term, says Edmar de Almeida, coordinator of the Economy and Energy Group of the Federal University of Rio de Janeiro (UFPR). With the decoupling of domestic fuel prices and those on foreign markets, oil companies have no interest in investing in refining in Brazil.
“Petrobras has enough production to meet the demand and doesn’t need to buy crude from them. Since there’s no incentive for refining, most of the output will go to exports and show up in the trade balance,” Mr. Almeida says.
By the end of the decade, with the pre-salt exploration blocks operating, Mr. Almeida sees foreign companies in better situation, because their earnings will vary according to international prices, while Petrobras will depend more on government decisions about fuel prices. “Unless the policy for the refining business changes, seeking to rebalance the price relation.”