Brazil pushes ahead with Key Oil Projects as Market Prices remain Lucrative

With Brazilian oil demand set to continue, Petrobras is making big plans for oil and gas as well as testing the water with greener fuels, although it is not yet investing in other renewables such as solar or wind power.

As several countries move away from fossil fuel production towards renewable alternatives, many will have to import oil and gas to bridge the gap during the transition period.

Meanwhile, the Energy Information Administration predicts that Brazil’s consumption of crude will rise 34% over the next three decades.

Petrobras exported around 27% of its crude last year, demonstrating the high national demand and the potential to expand.

This month, Petrobras signed a $5 billion revolving credit facility, that ends in 2026 with the potential a further two-year extension. It signed the agreement with 16 banks, replacing the $4.35 billion revolving credit facility it contracted in 2018.

This borrowing power will allow the company to use the cash more effectively, maintaining access to its liquidity without additional costs.

Petrobras is going ahead with several projects in oil and gas while demand remains high. Quick to repair the Manati field export pipeline’s sub-sea valve, the gas production is back up and running after around 10 days of pause.

Manati provides a high gas output, which totaled 120.7 million cubic feet per day of production in November, of which Petrobras took a 35% share.

Just days ago, TBG, the Brazilian pipeline company, sold its 2022 natural gas transport capacity to Petrobras for its Bolivia-Sao Paolo route.

The company requested injection volumes of 19.7 million m³ per day and withdrawal volumes of 17.7 million m³ per day from TBG.

International companies are also noting the value of Brazil’s oil potential. In November this year. Petrobras awarded two $549-million contracts to drilling contractor Seadrill Limited for a fixed three-year term.

This is part of plans for the West Carina and West Tellus rigs to start working for Petrobras in the third quarter of 2022.

And this month, Seadrill acquired a third contract to work with Petrobras in the Búzios oilfield offshore Brazil, at an estimated cost of $264 million. The West Jupiter drillship will commence operations by the end of 2022.

Brazil is a strategically important market for the offshore sector and I am pleased that Seadrill will continue to play an increasingly significant role in the coming years.

But oil and gas are not the company’s only interests, as it looks to expand its energy portfolio by developing renewable projects across the country.

Petrobras hopes to start testing renewable diesel, made from co-processed soybean oils, with customers from as early as in 2022.

Pending regulatory approval, the energy firm hopes to invest $600 million in new production units between 2022 and 2026. This includes the conversion of the Paulinia and Cubatao refineries to produce a total of 505,000 tonnes of renewable diesel each year.

At present, Petrobras is one of the region’s principal exporters of low-sulfur marine fuel, with competitors in Venezuela and Mexico lagging.

Petrobras has stated its aims to capture 25 million tonnes of carbon dioxide through 2025 as well as cutting its carbon emissions by 25% by 2030.

Petrobras continues to focus heavily on oil and gas, responding to national needs and its potential international position during the energy transition.

With several new projects planned for the next decade, Brazil is not likely to give up on fossil fuels any time soon.

And while it hasn’t shown much interest in renewables such as solar and wind power, Petrobras could expand to offer greener diesel and biofuels, supporting the decarbonization of transportation with an aim to cut emissions.

Oil Price.com / ABC Flash Point News 2021.