Since 2016, Petrobras has set oil barrel prices based on international values. This practice is applied throughout the production chain.
Petrobras’ International Parity Policy (PPI) was implemented in 2016, when it was chaired by Pedro Parente, during the administration of former President Michel Temer, who took office after supporting the impeachment of Dilma Rousseff. In practice, what is done is to dollarize the price of oil extracted, refined and consumed right here in Brazil, resulting in on rising fuel prices derived or not from oil whenever the value of the product increases abroad.
The question we ask is the following: why doesn't Petrobras practice PPI only on exported oil, instead of taxing all national production?
It turns out that this issue was well tied up in the Bylaws of Petróleo Brasileiro SA or “Statute of Petrobras” and, therefore, if this is not practiced, it is possible that members of the state-owned company's Board of Directors will be civilly and criminally prosecuted for damages to the company.
A Petrobras oil and gas specialist, consulted by the CPG Portal – Click Petróleo e Gás, recalls that attempts at freezing and subsidies, carried out by other administrations, caused billionaire losses to the state-owned company.
“If you do that, there is destruction of the value chain (ethanol producers, private refiners, fuel formulators, braskem, imported,” said the source, recalling that the policy of practically freezing fuel prices in 2014 cost almost R$ 100 billion, even harming ethanol at the time, as the percentage of alcohol in regular gasoline is 27% and, therefore, there must be market regulation.
Could international parity pricing change in 2023?
In March of this year, the Federal Senate approved the Bill 1472/2021 which changes the way fuel prices are calculated, in addition to creating a Stabilization Account. The author of the text, Senator Rogério Carvalho (PT-SE), argues that the PPI has consequences for the entire economy and harms the most vulnerable population, in addition to that, Petrobras would have reduced its ability to refining in order to increase the presence of the private sector in the sector. The writing goes to the Chamber of Deputies.
PPI being part of electoral speeches
In this election year, the main pre-candidates for the Presidency of the Republic have been criticizing the constant increases in the prices of fuels derived from petroleum, drawing attention to what little was said by the general public until then: Petrobras' International Parity Policy .
Earlier this month, Jair Bolsonaro classified Petrobras' profits as "rape". It turns out that in the first three months of this year alone, Petrobras earned US$ 9.405 billion (R$ 44.6 billion). This mega billing represents a jump of 3.000% compared to the same period in 2021 (gain of R$ 1.3 billion). The president of the state-owned company, José Mauro Ferreira Coelho said that the billionaire profit is not related to fuel price adjustments.
Also a pre-candidate, Lula has standardized his speeches when criticizing the PPI. The PT already promises to do what he calls “Brazilianizing” fuel prices. Ciro Gomes also follows the same line when he says that Petrobras is plundering the Brazilian people and that part of the profits disclosed will go to minority shareholders, who are bankers in Brazil and abroad.
Brazilian oil export numbers
Brazil produces around 3 million barrels of oil per day and exports around 1.4 million bpd, which represents more than 40% of extraction. Half of these exports go to powerful private companies such as Shell, Repsol, Toral and Galp.
Last year Brazil exported 67,564,850 tons of oil (483 million barrels), being the third most sold Brazilian product abroad, behind only soy and iron ore.
Still in 2022, Brazil's oil production should start to increase and reach 78% of growth by 2031, making the country reach the fifth place among the countries that most export the product on the planet.
According to eat stat, the main countries to which Brazil exported the most oil in 2021 were: China (US$ 14.3 billion), USA (US$ 3.1 billion), India (US$ 2.2 billion), Chile (US$ 1.96 billion ), Portugal (US$ 1.63 billion), South Korea (US$ 1.46 billion), the Netherlands (US$ 1.21 billion), Spain (US$ 1.08 billion), Singapore (US$ 1.01 billion) and Malaysia (US$ 795 million).