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Brazil, Opec in possible oil market dialogue

7 Nov 2017, 2.27 pm GMT

Brazil, Opec in possible oil market dialogue

Rio de Janeiro, 7 November (Argus) — Brazil, a major non-Opec oil supplier, is demonstrating a tentative willingness to cooperate with Opec after years of dismissing global efforts to restrict production.

Marcio Felix, oil and gas secretary at Brazilian mines and energy ministry, discussed the possibility of dialogue with Opec and non-Opec countries with Saudi Arabia's energy minister Khalid Al-Falih in a phone call last week, a ministry spokesperson in Brasilia told Argus.

The call, initiated by Riyadh, was not a formal invitation to a future Opec and non-Opec meeting, but the spokesperson said the government would consider sending a representative if such an invitation is made.

"The ministry will analyze the possibility of attending if Brazil is formally invited," the spokesperson said.

The ministry reiterated that under Brazilian law and through its oil contracts, the Brazilian government cannot interfere with the production rate of contracted companies.

In the past, the ministry has allowed officials to participate in high-level Opec and non-Opec talks, but Brasilia notably did not participate in the recent Opec/non-Opec agreements to restrict output.

The next meeting of Opec and 10 participating non-Opec producers will be held on 30 November in Vienna, immediately after Opec ministers meet earlier that day. The attendees will consider whether to extend an existing agreement to limit production, and possibly explore a longer-term arrangement.

Any hint of Brazilian participation, even if symbolic, would further the aim of key proponents of the output restraints to show momentum.

Brazil produced 2.65mn b/d of oil in September, with just over half of the output flowing from giant sub-salt deposits offshore. State-controlled Petrobras remains the country's top producer, but foreign companies led by Shell account for a growing share of output.

Brazil's oil production is expected to double to 5.2mn b/d in 2026, according to state-owned energy research agency Epe.


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