Brazil

Brazil's government-owned oil sales to climb sharply, official says

Reuters
05/05/2022 14:40
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Brazil's direct sales of crude will more than double this year and rise sharply this decade, as oil majors deliver more of their output to the government under production sharing agreements, according to a state official.

 

Government-owned volumes, until now nearly irrelevant, are ramping up and will reach 1.127 million barrels per day (bpd) by 2031, according to Eduardo Gerk, head of Pré-Sal Petróleo SA (PPSA), the state-run company that oversees the country's production-sharing contracts.

 

"Our scale of magnitude has started to change," he said on the sidelines of the Offshore Technology Conference (OTC) in Houston.

 

PPSA was created in 2013 to manage Brazil's stake in the vast pre-salt oil discoveries found off its coast.

 

The state's share of the oil comes from fields run by Shell Plc , TotalEnergies SA (TTEF.PA) as well as state-controlled oil producer Petrobras (PETR4.SA). They are newly delivering higher volumes under production sharing regulation the country inaugurated last decade.

 

PPSA has sold all of the 9.5 million barrels it expects to receive from commitments this year, in 19 shipments delivered to Petrobras. And as new wells go on stream, annual volumes should jump to 411 million barrels of oil in 2031, Gerk said.

 

Petrobras thus far has bought all of PPSA's allotted oil through competitive auctions in two-to-three year contracts, outbidding Shell, Total, Portugal's Galp and Chinese producers.

 

Future auctions will likely be held through Brazil's stock exchange operator B3, Gerk said, that will handle government-owned production that should average 95,000 bpd in 2024, he said.

 

However, hiring a trading firm to market the oil also is a possibility, Gerk said.

 

"We will have to review market conditions then," he said.

 

The next big slug of Brazil's oil to be sold will come in mid-2024, when Petrobras contracts from its massive Buzios and Mero fields start to expire, Gerk said. Future production from Sepia, Atapu, Itapu and Bacalhau fields also is yet to be marketed, he said.

 

Brazil produces about 3 million bpd of crude today, with the government stake responding for less than 1% of the total. The government stake is projected to rise to about 20% of the country's total production in 2031, when total country production is estimated at more than 5 million barrels per day of crude, Gerk said.

 

The government's oil volumes include a stake of the Mero deepwater field, where consortia among Brazil's Petrobras, Shell and China's CNOOC and CNPC on Monday started production. The group's platform is designed to pump up to 180,000 bpd of crude.

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