What is the interest of international companies in the O&G market?

The Oil & Gas production market – Oil & Gas – is one of the most global in existence. Even if a country works initially to meet its domestic demand, the interest of other nations – mainly of the great powers – shapes development and the productive infrastructure.

Therefore, analyzing the sector in Brazil also demands considering the importance of foreigners in the O&G market. To this end, we have the help of Marcelo Gauto, a specialist in Oil, Gas and Energy. Follow our content in an objective discussion about this relationship and what it means for companies operating in the area!

Why Brazilian oil is attractive to foreign markets

As much as Brazil has been an oil producing country for a long time, we have only recently gained prominence on the world O&G stage. It is because?

The main reason for this change is clear for those working in the sector: the pre-salt reserves found by Petrobras and the development of technology capable of doing this type of exploration.

In this sense, Marcelo points to a drastic change in the characteristic of Brazilian production from 2013 to here, in two fundamental points.

Quantity

First, we can talk about the amount of oil extracted. “From 2013 until now, Brazilian oil production has grown by 50% and, in 2019, has a surplus of 1 million barrels per day (bpd)”, says the expert.

This means that, in addition to serving the domestic market, the country has consolidated itself as an exporter of raw materials, attracting the attention and investment of other markets.

Quality

Having the product to sell does not create opportunities. Another determining factor for Brazil’s repositioning in the O&G market is the quality of the oil extracted in the pre-salt.

In previous reserves, the oil extracted here was of high density, with API below 22. In the Tupi field, the largest producer of the input, the API is 31, considered at the threshold between medium density and light. Marcelo explains in more detail: “The lighter an oil is, the higher its yield on noble derivatives like gasoline and diesel. There is less refining effort. In addition, the sulfur content of pre-salt oils is considered low. Sulfur is an inconvenient impurity for refiners, as it requires more complex refineries to remove it from the fuels produced”, details the specialist.

This last characteristic is especially interesting when we consider the new resolution of the International Maritime Organization, IMO 2020. The determination reduced the limit for the presence of sulfur in fuels used by vessels from 3.5% to 0.5% – a considerable change.

In other words, international markets started to be more selective about this oil content that they import for refinement, since the low levels since the crude product cheapens and simplifies the entire chain.

And it is in this scenario that Brazil becomes increasingly better positioned as a player to be considered within the global market. A high-quality oil being produced in ever increasing quantities – without giving up on safety and technological efficiency.

What is the current situation in the O&G market?

The year 2020 proved to be a real challenge for humanity, and the reflexes of the Covid-19 pandemic were reflected in all productive and commercial sectors. For O&G, the impact was even more significant, as demand significantly decreased in a few months and the volatility of oil prices demanded caution and stability from companies in the sector.

But if there is something that the beginning of recovery shows, it is that this industry can come out even stronger from the blow it suffered. Demand is returning to normal levels, and growth is expected to continue in the coming years.

Exports have been breaking records in the country and have become a commercial weapon to position it among important and varied partnerships around the world.

The big difference that we are seeing now is a greater opening of Brazil not only to trade. There is an evolution in exploration, development, and research partnerships with the approach of companies from all over the world.

What to expect from the importance of foreigners in the O&G market for the future

When we think about a future for the oil industry, the most important key is the balance between sustainability of exploration, efficiency, and environmental concern.

It is a perfect scenario for Brazil to continue to stand out and gain even more evidence in the international market share. After all, the development of the sector in Brazil has been prepared for this future for a long time.

Brazilian techniques, studies and infrastructure are modern and focused on producing safely and prioritizing return on investment. Combining this with the quality of our oil, the position is very favorable.

Even because such demand for low density has become a complementary effect of what is encouraged by IMO, which encourages the search for oils with low sulfur content. The Búzios field, a substitute on the horizon for the decline of the reserve in Tupi, has the same characteristics of medium API and low sulfur content, among other oils with similar characteristics that are coming from pre-salt areas already tendered.

It is the time, therefore, to continue investments in development and embrace the potential that the country has on the world stage.

“It is projected that Brazil will have an oil production that will rank us among the six largest exporters in the world, with daily production exceeding five million barrels by 2030, compared to the current three million bpd”, explains Marcelo. “The environment, however, will be quite challenging, in a scenario of oil oversupply and energy transition, which can keep commodity prices low for a long period of time,” he ponders.

In other words, the adversity lies in the increase in production to serve the market, while seeking sustainable and efficient forms of production, which reduce costs and make profit more attractive to all companies within this chain.

Here, let us understand one thing: if there is something in this recent evolution in the Brazilian market that shows a positive future, it is our ability to reinvent ourselves and innovate. The importance of foreigners in the O&G market lies in the commercial validation of our ability to create a robust and competitive sector.

And how do you see the current situation of O&G and the participation of Brazil in the global context? Leave your comment below!