Oil & Gas industry in Brazil: reforms in the energy transition era
Significant offshore oil and gas discoveries have confirmed Brazil’s status as one of the world’s major oil and gas provinces. This status results from the development of pre-salt projects, which has strengthened Brazil’s leadership in developing deep-water and ultra-deep-water projects. The Brazilian state-controlled oil company, Petrobras, increased its investments substantially in the upstream sector to develop the new discoveries. Faced with sharp falls in crude oil prices in 2009, 2015, and 2020, increased oil price volatility, and corruption scandals, Petrobras has had to cope with a steep rise in its debt, loss of investment-grade and higher financing costs compared to other major companies. This context paved the way for the company’s strategy focusing on value maximization with higher concentration in pre-salt projects and divestments in other areas. Pre-salt projects are predominantly oil producers, but in some major fields, natural gas is produced with a high content of CO2, which hinders it from being directed exported and thus it must be treated and partially reinjected into the oil fields. These features have shaped Brazilian oil policy choices over the last decade. The primary purpose of this research project is to analyze a range of these policy choices, their determinants, and the evolving role the oil sector will play in shape the energy transition.