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South America’s largest oil producer, Brazil, will launch discussions on potentially joining OPEC in July, Brazilian Energy Minister Bento Albuquerque told Reuters on Wednesday.
In July, Albuquerque is scheduled to visit Saudi Arabia, and on that occasion, Brazil could begin talks on becoming a member of the Organization of the Petroleum Exporting Countries, the minister said.
Even if talks are successful, Brazil is not expected to become a member of OPEC this year, Albuquerque told Reuters.
Currently, the South American oil producer is okay with the Brent Crude price at around US$64 a barrel as it is a “fair” price, the minister said.
The idea that Brazil may join OPEC was first aired in October last year, when Brazilian President Jair Bolsonaro said that OPEC’s top producer and de facto leader Saudi Arabia had informally asked Brazil to join the organization.
“I personally would very much like Brazil to become a member of OPEC,” Bolsonaro said at the Future Investment Initiative 2019 in Riyadh in October.
The idea was met with resistance from the Brazilian industry because producers are concerned that once an OPEC member, Brazil may have to play along and comply with any organization-level production cuts just as its oil production is rising and set to continue to increase.
Production in Brazil is rapidly growing thanks to start-ups of new offshore oil fields.
OPEC itself estimates that Brazil will be the second-largest contributor to non-OPEC supply growth in 2020, after the United States. Brazil, like the United States, is not part of the OPEC+ coalition that currently restricts production hoping to draw down global oversupply.
In November, Brazil’s crude oil production topped 3 million barrels per day for the first time ever, the National Petroleum Agency reported, adding that total oil and gas production rose to 3.95 million barrels of oil equivalent daily - also a record-breaking figure.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.