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Petrobras loses importance in Brazil with the emergence of multinationals

Paulo Nogueira
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16-04-2018 11:58:59
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Experts say Petrobras has been drastically reducing its operations in Brazil as foreigners acquire exploratory blocks

THE Petrobras produced around 75% in February 2018 and more than 92% in 2010, right at the end of the government of former President Luiz Inácio Lula da Silva. This reduction started to happen when the pre-salt activities were starting, already in the governance of Dilma Rousseff. When Michel Temer assumed the presidency of Brazil in 2016, there was a slight acceleration due to the opening of the market to foreigners, which caused a 7-point reduction in Petrobras' participation in the market.

According to specialists, Petrobras tends to reduce its operations as other oil multinationals occupy the market, among the main ones, the Statoil, Total, Exxon Mobil and Shell, which are already in a real marathon to secure as many stakes in the pre-salt as possible, which in fact, is one of the most promising oil assets on the planet ever found, very extensive and that only one company is not able to explore.

From September 2017 to date, Brazil held three exploratory blocks auctions with one more scheduled in 2 monthss. Petrobras sees this as a double-edged sword: It loses the monopoly of operational productivity in the national territory, however, it manages to add new technologies and gain financial strength by partnering with multinationals.

Nelson Silva, Director of Strategy at Petrobras, said that the situation is unfortunately a necessary evil, but it is extremely important for other oil companies to operate in the country at this time. As many of the state-owned projects were frozen due to the Lava Jato issue, there were a lot of losses, in the order of billions in commercial dollars with the low prices of a barrel of oil.

With each passing day, foreign companies are expanding their business in Brazil, we can take with example Exxon, which injected more than US$ billion by partnering to acquire 22 offshore operating permits in recent months. Samuel Pessoa, economist at FGV, says that the insertion of foreign oil companies in our market is essential for Brazil to return to producing at least 4 million barrels daily and guarantee a certain “stability”.

Many say that Petrobras is treading an inevitable path to privatization by handing over its portfolio of services to foreign, others claim that the state-owned company does not have the cash and technology to explore all of the country's oil blocks. One thing is certain, Brazil has one of the most relevant hydrocarbon potentials in the country and exploring it is necessary to guarantee taxes and a robust economy.

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Paulo Nogueira
With technical training, I worked in the offshore oil and gas market for a few years. Today, my team and I are dedicated to bringing information from the Brazilian energy sector and the world, always with credible and up-to-date sources.