With state-controlled Petrobras working to increase its oil output and export, Brazil is looking for new options to diversify its export market. While exports of crude to China will continue to increase, having reached 1 million barrels per day (bpd) in April this year, Brazil is interested in finding other options for its growing supply, with a focus on Asia. Petrobras is aiming to produce more bpd to meet this growing demand. The move will also allow Petrobras to minimize its dependence on China.
"We expect this to have a positive evolution in the near future, in three years approximately to have a consolidated position in the (Indian) market," CEO of Petrobras, Roberto Castello Branco, told Reuters earlier this week.
India is an attractive market for any budding supplier, expected to be the biggest source of energy demand growth through 2050, with an anticipated demand of 6 million bpd by 2025. Further, any disruption felt from Covid-19 is beginning to diminish as fuel demand from farmers for the harvest, as well as the annual increase in demand for festival season, is helping the industry to bounce back.
Meanwhile, India is looking to diversify its suppliers, with Brazil appearing an attractive opportunity. In January, Oil Minister Dharmendra Pradhan met with Brazilian Minister for Mines and Energy Bento Albuquerque to discuss the potential partnership between the two countries.
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India, the world's third-largest oil importer, currently imports around 84 percent of its oil, relying on oil-rich regions to meet its needs. Approximately two-thirds of Indian oil come from the Middle East, principally Iraq and Saudi Arabia.
Pradhan tweeted of the meeting earlier this year, "India is diversifying its crude oil supply and our oil companies have expressed interest in sourcing more crude from Brazil, if offered favorable commercial terms. Also sought intervention for early monetization of our existing investments in the Brazilian energy sector."
The partnership between the two states looks hopeful as Prime Minister Narendra Modi approved the signing of a Memorandum of Understanding (MoU) with Brazil to cooperate in oil and natural gas, in the Union Cabinet in early 2020. We can expect greater cooperation in exploration and production by the two sides, as well as enhanced research and development collaboration in the near future.
By Felicity Bradstock for Oilprice.com
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Felicity Bradstock is a freelance writer specialising in Energy and Finance. She has a Master’s in International Development from the University of Birmingham, UK. More