BMI View: Brazil's vast pre-salt reserves suggest substantial growth potential over the long term, underpinning our bullish upstream view that crude, natural gas, and other liquids output will rise over the next decade. However, production growth will be limited by declining investment funds and continued headwinds from the corruption scandal and ongoing political crisis . As such, we maintain a relatively modest outlook, reflecting our view that the above-ground environment remains a considerable obstacle to the upstream and downstream segments due to weakening project economics, waning investor confidence, and a burdensome regulatory environment.
|e/f = BMI estimate/forecast. Source: ANP, BMI|
|Crude, NGPL & other liquids prod, 000b/d||2,346.3||2,527.0||2,625.4||2,689.6||2,742.5||2,769.9||2,811.0|
|Refined products production, 000b/d||2,242.8||2,265.3||2,276.6||2,285.7||2,331.4||2,366.4||2,390.0|
|Refined products consumption & ethanol, 000b/d||2,689.3||2,670.0||2,619.8||2,658.5||2,700.8||2,748.3||2,799.5|
|Dry natural gas production, bcm||22.7||23.9||25.7||26.9||27.9||28.6||29.2|
|Dry natural gas consumption, bcm||45.7||47.5||48.7||49.7||50.9||54.5||56.6|
The key trends and developments in the Brazilian oil and gas sector are:
On May 12, Brazil's Senate joined the lower house, voting to open an impeachment trial for President Dilma Rousseff for alleged misuse of public funds. Brazil is set for a shift to more centrist policies with the ascendance of former vice president Michel Temer to the presidency. We expect that the Senate will ultimately vote to impeach Rousseff in the months ahead, ending 13 years of leftist Partido dos Trabalhadores (PT) rule, and paving the way for Temer to remain in power until new elections are held in 2018.
While early policy statements from Temer and his aides indicate upside for Brazilian growth over the next few years, staunch legislative opposition from Rousseff's PT, an ongoing impeachment trial and potential for substantial public pushback against cutting spending in the midst of a deep economic recession will likely stymie the pace of reform, including within the oil and gas sector.
Reports are surfacing that Brazilian officials plan to alter existing presalt regulations in the coming weeks to encourage greater private investment in the oil sector. The new proposals would allow privately owned companies to operate production-sharing contracts (PSCs) in deepwater acreage, altering a key element of the Presalt Law passed in 2010. Producers other than national oil company (NOC) Petrobras will only be able to operate in the presalt if blocks are sold to combine operations with existing concessions that were signed prior to the passage of the 2010 law.
Potential changes to Brazil's presalt regulations will provide little upside for investment over the next year. An unfavourable operating environment and Petrobras' reduced capex plans will deter greater private sector involvement, supporting our more modest production forecast.
On May 12, Brazilian national oil company (NOC) Petrobras released its Q116 financial results, revealing continued operational challenges that lie ahead. The company reported weaker financial metrics on a y-o-y basis, with quarterly net income falling from USD1.9bn in 2015 to a loss of USD300mn this year. Whilst losses narrowed since Q415 - when net income fell by USD9.4bn - further declines point to continued unprofitability in the upstream sector despite efforts to reduce costs.
The Brazil Oil & Gas Report has been researched at source and features BMI Research's independent forecasts for Brazil including major indicators for oil, gas and LNG, covering all major indicators including reserves, production, consumption, refining capacity, prices, export volumes and values. The report includes full analysis of industry trends and prospects, national and multinational companies and changes in the regulatory environment.
BMI's Brazil Oil & Gas Report provides professionals, consultancies, government departments, regulatory bodies and researchers with independent forecasts and competitive intelligence on the Brazilian oil and gas industry.
- Benchmark BMI's independent oil and gas industry forecasts for Brazil to test consensus views - a key input for successful budgeting and strategic business planning in the Brazilian oil and gas market.
- Target business opportunities and risks in the Brazilian oil and gas sector through reviews of latest industry trends, regulatory changes and major deals, projects and investments in Brazil.
- Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. SWOTs, KPIs and latest activity) and Competitive Landscape Tables.
BMI Industry View
Summary of BMI’s key forecasts and industry analysis, covering oil and gas reserves, supply, demand and refining, plus analysis of landmark company developments and key changes in the regulatory environment.
Industry SWOT Analysis
Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the upstream and downstream sectors and within the broader political, economic and business environment.
BMI Industry Forecasts
Historic data series and forecasts to end-2024 for all key industry indicators, supported by explicit assumptions, plus analysis of key downside risks to the main forecast:
- Pricing: Oil price (USD/bbl, WTI, Brent, OPEC basket, Urals); oil products prices (unleaded gasoline, gasoil/diesel, jet/kerosene – USD/bbl) at global hubs.
- Production, Consumption, Capacity & Reserves: Proven oil reserves (bn barrels), production, consumption, refinery capacity and throughputs (‘000b/d); proven gas reserves (tcm), production and consumption (bcm) and fuels trade.
- Imports & Exports: Crude oil exports/imports (‘000s b/d) and value of crude oil trade in USD. Fuels exports/imports (‘000s b/d) and value of fuels trade in USD. Natural gas imports/exports (bcm), by pipeline and/or LNG, and value of natural gas trade.
BMI’s Oil & Gas Risk Reward Index
BMI’s Risk Reward Indices provide investors (independents, NOCs, IOCs, oil services companies) looking for opportunities in the region with a clear country-comparative assessment of the upstream and downstream market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors, with each position explained.
A profile of the upstream and downstream sectors, including analysis of reserves, output, consumption and trade of energy products; overview of the industry landscape and key players; assessment of the business operating environment and the latest regulatory developments.
Comparative company analyses by USD sales, % share of total sales, number of employees, year established, ownership structure, oil production (‘000b/d), gas production (bcm), downstream capacity (‘000b/d) and % market share.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate Company SWOT analyses. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
Regional perspective on size and value of the industry. Plus comparative rankings by production, refining, imports and exports of oil, gas and LNG.
Global Oil Market & Oil Products Outlook
Based on our country coverage of over 99% of global oil and gas production and consumption, BMI provides demand, supply and price forecasts to end-2024 for oil, gas and oil products.
The Oil & gas Reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.