Brazil Oil and Gas Report Q2 2012 Published : March 2012
No. of Pages : 95
Price:US$1175
BMI View: The discovery of billions of barrels of oil in the so-called subsalt oil province offshore Brazil has been one of the most significant developments in the global oil industry for many years. Regulatory reforms under former president Luiz Inácio Lula da Silva place much of the onus for developing those reserves on state-run Petrobras, although foreign companies will also play an important role. Crude production should grow rapidly over the coming years, with the country forecast to add more than 1mn b/d of output by 2016 and nearly 3mn b/d by 2021. The main trends and developments we highlight in the Brazilian oil and gas sector are: 1. Repsol Sinopec Brasil, a joint venture (JV) between Spain's Repsol and China's Sinopec, has reported a 'significant' oil discovery off the coast of Brazil at the Păo de Açúcar (Sugar Loaf). One of the partners in the block is Norway's Statoil, which declared the Păo de Açúcar discovery as 'high-impact' and holds in-place resources of more than 250mn barrels of oil equivalent (boe). The discovery is the consortium’s third on the BM-C-33 block. 2. Oil production growth in 2012 is likely to be modest, relying on the Guara and Baleia Azul projects to boost liquids output to 2.82mn barrels per day (b/d), including ethanol production. By 2016, we see crude production hitting 2.90mn b/d, with total output at just under 3.90mn b/d including ethanol. A period of strong and sustained growth is forecast for the latter part of the period as subsalt projects enter production. Brazil is set to pump at least 5.81mn b/d by 2021. 3. Rapid economic growth will continue to push domestic oil consumption higher, though the country’s unique ability to alternate between ethanol and gasoline consumption in the transport sector – based on short-term price movements – makes forecasting difficult. Given that economic growth will be supported by surging oil production, oil demand is also expected to rise rapidly in the second half of the forecast period. Total oil consumption is expected to rise from an estimated 2.69mn b/d in 2011 to 3.52mn b/d by 2016 and 4.61mn b/d by 2021. 4. While much of the focus and investment in the country’s hydrocarbons sector will be targeted at the development of its oil resources, natural gas production is also expected to grow. The country’s estimated gas production of 13.2bn cubic metres (bcm) in 2011 is forecast to jump to 23.6bcm by 2016, then rising further to at least 37.0bcm by 2021. 5. Relatively modest gas production and increased gas consumption in the industrial, residential and power sectors will mean that Brazil remains a net gas importer. Gas imports will hover at around 12-15bcm per year over the next decade. Brazil will continue to rely on pipeline imports from neighbouring Bolivia to meet much of its needs. 6. Based on total liquids production, Brazil will received theoretical revenues of US$3.26bn in 2011, with the potential for US$10.45bn by 2016 and almost US$41.0bn by 2021. Gas imports are thought to have cost US$8.44bn in 2011, rising to US$9.14bn by 2021. This suggests a possible total oil and gas revenue stream of US$3.07bn in 2016, soaring to US$31.63bn by 2021. At the time of writing we assume an OPEC basket oil price for 2012 of US$99.38/bbl, falling to US$97.23/bbl in 2013. Global GDP in 2012 is forecast at 3.2%, up from an assumed 3.1% in 2011, reflecting a faltering recovery in the US and an uncertainty with regard to the eurozone debt situation. For 2013, growth is estimated at 3.7%. Brazilian Oil and Gas Industry Table of Content BMI Industry View 5 SWOT Analysis . 7