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Brazil's crude oil production has been under pressure lately,
after dropping by around 6.5% during the last three months,
following an impressive start to the year. According to ANP
(Agência Nacional do Petróleo, Gás Natural e Biocombustíveis),
production stands at 2.56 million b/d, with a decline of around
1.3% year-on-year. This drop has primarily been driven by
maintenance of the FPSO Cidade de Mangaratiba platform, operating
in the Campo de Lula. However, exports of crude oil have been quite
strong this year, having expanded by around 17% year-on-year
between January and July 2019, as data by IHS Markit Commodities at Sea
suggests.
There is still optimism, with the National Petroleum Agency
(NPA) expecting Brazilian oil production volume to "reach one of
the highest in the world" during the next couple of years. Two more
auctions will be held this year, scheduled for October and November
which will include pre-salt areas. Revenues could reach BRL 11
billion (USD 2.9 bn).
Meanwhile, state-led oil producer Petrobras is cutting spending
by almost a third in 2019, as announced last week, with the company
feeling the impact of a weaker Real and some delays in drilling
activity together with problems faced with floating production
units. The company now plans to spend around USD 10.5 billion this
year, down from previous estimates of USD 16 billion. This forecast
doesn't include any potential participation in domestic upcoming
bid rounds.
Some of the world's oil majors have already confirmed their
interest to expand further their exposure to Brazil, with Vitol
planning to acquire 50% of Grupo Dislub Ecuador (GDE), which
controls the country's sixth largest fuel station network. This
move is quite similar to Glencore's decision to acquire a majority
stake in Ale Combustíveis last year, with 1,500 gas stations across
Brazil.
Posted 09 August 2019 by Fotios Katsoulas, Liquid Bulk Principal Analyst, Maritime, Trade & Supply Chain, S&P Global Market Intelligence
