US president Donald Trump claimed this week that "the biggest oil companies in the world are going in" to Venezuela, but leading private-sector firms continue to see Brazil as their prime opportunity.
The country's abundant deepwater resources, stable regulatory environment and favourable geography make it an attractive investment destination for leading international oil companies, as wars and uncertainty continue to rattle global oil markets. Executives at this week's ROG.e conference in Rio de Janeiro were only too eager to talk up Brazil's advantages. Shell is the biggest private-sector producer in Brazil, with equity output of about 500,000 b/d. Chief executive Wael Sawan said growing disruption from the Russia-Ukraine and US-Iran wars will present a "multi-month challenge to supplies" globally, but he saw Brazil as a winner. "Brazil has the optionality and flexibility to not just support Brazilians but also support the rest of the world in the export of energy," he said.
Led by state-controlled Petrobras, Brazil's upstream producers pushed crude output to a record 4.5mn b/d in July, according to hydrocarbon regulator ANP. The country has redirected crude exports to new Asian markets this year, driven by reduced demand from China, and to Europe thanks in part to a 50pc cut to a temporary 12pc crude export tax under an agreement between the EU and Mercosur trade bloc. "I was quite happy to have big production in Brazil to fill my European refineries," TotalEnergies chief executive Patrick Pouyanne said.
BP vice-president for upstream Gordon Birrell said the world is entering a new upstream era defined by the need to meet growing demand while building more resilient energy systems. "For BP and the wider industry, Brazil represents a great opportunity in the new upstream era," Birrell said.
Petrobras chief executive Magda Chambriard told the conference the company is nearing record crude output of 3mn b/d, and that its increased production and technological development is helping to push back Brazil's production peak to 2034-35. Brazilian state-run energy research agency Epe currently forecasts a national production peak of 5.1mn b/d in 2032.
Eyes on the frontier
Petrobras is betting on new frontiers such as the equatorial margin off the northern coast to keep up production levels as pre-salt output naturally declines. It began drilling in the environmentally sensitive region last year following an extensive licensing process, and hopes next year to prove up the commerciality of hydrocarbons it has found there. Foreign firms are also eyeing Brazil's new deepwater frontiers as opportunities for further growth. Shell has "appetite to continue to grow beyond our current positions", Sawan said. ExxonMobil hopes to bring its Guyana expertise to Brazil's equatorial margin, where it holds 10 exploration licences with Petrobras. "We want to be a part of that next chapter that's written in Brazil," senior vice-president for deepwater Hunter Farris said.
But foreign executives also warned that maintaining a stable fiscal and regulatory environment is key to remaining attractive to investors. The temporary 12pc tax on crude exports has rattled producers, while Brazil started taxing dividends this year, and will introduce a selective "sin tax" covering oil from 2027 as part of a broad reform — factors that "might jeopardise future investments", Repsol Sinopec Brasil's deputy chief financial officer, Gilberta Lucchesi, said.
TotalEnergies' Brazil country chair, Olivier Bahabanian, flagged up difficulties in obtaining environmental permits, which led his firm to exit the equatorial margin in 2020: "Not having the certainty that you will get that licence, even if you do the work properly, is not compatible with the business of exploration."
