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Brazil's crude oil production has remained strong since
November, when it reached a new record high, according to the
National Petroleum Agency. Shipments of crude oil have followed a
very similar trend, according to data by IHS Markit Commodities at Sea,
with January's loading during the first ten days having surpassed
1.5 million b/d yet again, as happened in November. December was
only marginally lower, suggesting that the country has managed to
stabilise output and exports at this level. The increased output
has been a result of the eight new floating production facilities
added, with total production up by more than 100,000 b/d since
October. 2020 looks very positive for Brazil, with its production
and exports set to expand further.
The presalt zone has contributed the most, having accounted for
around two thirds of last year's growth in Brazil's crude oil
production. The field Lula has been leading the way, having
produced more than one million b/d of crude last month. Another
very promising field has been Buzios, with current production
already standing close to 600,000 b/d.
In terms of importers of Brazilian crude oil, it has been
China's appetite to absorb more and more, with flows in Q4 2019
having approached 700,000 b/d. We should also consider flows to
other parts of Asia, with Brazil having invested in storage
facilities in South East Asia in the second half of 2019, with most
of these volumes getting re-exported sooner or later mostly to
China as well. This means that China's imports from Brazil
increased much faster in late 2019, with more to follow in 2020.
The relationship established between the two countries is set to
last as China continues to invest in new projects in Brazil. Flows
to the USA remained more or less unchanged, even after the
sanctions imposed on Venezuela.
Posted 13 January 2020 by Fotios Katsoulas, Liquid Bulk Principal Analyst, Maritime, Trade & Supply Chain, S&P Global Market Intelligence
