Paraphrasing HM Queen Elizabeth II, 2020 is not a year on which the oil industry (or the world in general) shall look back with undiluted pleasure. In the words of the Queen, one might consider it our annus horribilis.

Much has been said (and written) about 2020. So I will no further explore it. As an insufferable and hopeless optimist I believe our main challenge is now to turn 2021 in our “annus mirabilis” (or as close to it as possible).

The good news is that despite the health crisis, the Brazilian government remains in full swing in building reforms in the oil and gas sector. In recent years, Brazil was able to take advantage of great opportunities to attract investments. We adjusted our Local Content policy, resumed exploratory block auctions and regulated mechanisms such as the reserve based lending. Moreover, the country created an ingenious and innovative mechanism to offer auction E&P concession contracts and Petrobras’ assets sale program created opportunities for new players on E&P assets, refineries, thermoelectric plants, fertilizers and gas assets.

The country identified the necessary actions to eliminate regulatory restrictions and stimulate competition in the sectors of supply, distribution and resale of oil products, cooking gas and natural gas. We have made progress in introducing competition and price transparency. The New Gas Market is advancing rapidly. Important programs such as Reate2020 and the Abastece Brasil initiative were delivered and generated their first results. Reate2020 is now on a new phase and the Ministry of Mines and Energy just launched the Promar Program (is main objective is create conditions for the revitalization of mature offshore fields). RenovaBio was implemented and regulated.

That´s the good news: much has been done. The bad news is that much remains to be done. And the Covid-19 pandemic highlighted this sense of urgency, the need to move even further.

When we look at the big picture, we have a myriad of challenges ahead, most of them summarized in the National Energy Plan 2050, approved in its final version in December 2020. Although the energy systems are in transformation, oil remains an indispensable source in Brazil and in the world. Only competitive opportunities will thrive, though. Therefore, we need to unlock our exploratory new frontiers, maximize the recovery of our hydrocarbon reserves, accelerate the development of the natural gas industry and do all that while advancing towards a decarbonized future.

Worldwide, the economic impact of relief packages and the Covid-19 vaccination rates are set to increase. Therefore, in the short and medium term, there will be investment opportunities as society´s net income and government spending grow. The economic recovery, in the short term, will probably become energy intensive, increasing the demand for oil long before it finally falls. As a result, considering expectations that the global oil demand gradually will recover in 2021, Brent prices reached in January their highest values since February 2020.

And to answer the question I proposed in the beginning of this paper, how can we turn 2021 in our “annus mirabilis”? We accelerate. The oil and gas industry is a global one, used to facing challenging environments and dealing with risks. But in order to remain attractive, Brazil must invest in overcoming the many inefficiencies that we still have. So, Brazil needs to finish its industry reforms. As a dear friend recently told me: regulatory stability is important, improvement in the regulatory process is important, but the most important thing is to not miss the opportunity to do the right thing, at the right time.