Page 5 - LatAmOil Week 04 2020

LatAmOil COMMENTARY LatAmOil
 He also expressed scepticism about the possibil- ityofco-operatingcloselywiththegroup.
“Brazil is one of the largest oil producers. Now, we have our convictions. Just like other Western liberal democracies, we would never favour using cartels or strengthening cartels to corner democracies that live on oil,” he said, according to Argus Media.
Guedes was referring not only to joining OPEC but to signing on to the OPEC-plus agreement between the cartel and several non-members such as Russia. The latter serves as a framework for joint action to keep world crude prices from sinking to unsustainably low levels.
The CEO
Similarly, Roberto Castello Branco, the CEO of the national oil company (NOC) Petrobras, ruled out acceptance of the invitation in early December. “To be a member of OPEC, or not, is not an option that’s being considered by the Brazilian government,” he told Bloomberg dur- ing an interview in New York.
Castello Branco also declared himself to be “against the cartels,” according to a report from Panorama Offshore. “Brazil can do better,” he declared.
Petrobras executives have opposed previ- ous calls for making Brazil a member of OPEC. They have justified this stance by arguing that joining the group would put the government in the untenable position of dictating production policy to privately owned companies.
The minister
Energy and Mines Minister Bento Albuquer- que appears to be more sympathetic to Guedes’ point of view. Nevertheless, he has indicated that he is amenable to discussing some form of co-operation with the cartel.
Last week, for example, he said that Brasi- lia would discuss the possibility of co-oper- ating with OPEC with Riyadh later this year. According to a statement from the ministry, Albuquerque will meet with Saudi officials to discuss proposals for working more closely with OPEC during a visit to Riyadh in July. “The minister [has] indicated that he intends to attend the G20 energy ministers’ meeting and that he [will] talk to Saudi officials about the bilateral
energy agenda and could even deal with possi- bleco-operationbetweenBrazilandOPEC,”the statement said.
Albuquerque spoke more definitively over the weekend, when he said that Brazil would opt to stay out of the group. He told Bloomberg in an interview conducted in New Delhi that Brasilia did not see OPEC membership as a necessary step in the country’s push to become one of the world’s five largest oil exporters by 2030.
Indeed, he indicated that OPEC’s produc- tion regime, under which member states are allotted quotas, would be a hindrance to Brazil. “The idea is just to increase our production and to participate more in the international oil and gas market. But this is not a plan for Brazil to join OPEC or any other association or group of oil and gas producers,” the minister said. “We don’t want restrictions. We want to increase our production.”
He also stated that the domestic oil indus- try’s top priority was to create more favourable conditions for investment. This includes open- ing up new opportunities for foreign investors to develop offshore fields in the pre-salt zone rather than insisting that Petrobras take the lead on every project, he said.
“Petrobras has a lot of oil and lot of areas to exploit, but it doesn’t have enough funds to pros- pect all these areas,” he told Bloomberg. “There’s a limit for Petrobras. For that reason, we want to make it attractive for others to come and do the investment.”
Conclusion
Overall, most of the key players in Brazil’s oil industry appear to oppose the prospect of OPEC membership. They see it not as an affirmation of Brazil’s emergence as a major crude producer but as a potential brake on the country’s ambi- tions and freedom of action.
So despite Bolsonaro’s early shows of enthu- siasm, Brazilian government officials appear to be moving towards a consensus. That is, they appear to be saying that joining OPEC is not on Brasilia’s agenda.
Nevertheless, Brazil will probably remain open to discussions on co-operation with the cartel. It is not likely to sign on to the OPEC-plus agreement at this point, but it may not be ready to rule it out either.™
“ key players
Most of the
in Brazil’s oil industry appear to oppose the prospect of OPEC membership
Oil-bearing pre-salt areas offshore Brazil (Image: JFE Steel)
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