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Brazil may be able to produce in the future as much as 7 million barrels of oil per day (bpd), Mines and Energy Minister Bento Albuquerque said on Wednesday, without specifying a timeline for this.
The South American oil producer, which currently pumps 3 million bpd of crude oil, could further consolidate its global position as an exporter of commodities, Albuquerque said ahead of the transfer-of-rights auction which is being held later on Wednesday.
In October and November, Brazil is holding three oil auctions for different areas under different regimes in its offshore basins.
The first auction, held on October 10, attracted major international oil companies, with Big Oil scooping up exploration blocks in the bid round that fetched a record total amount of signing bonuses. The massive transfer-of-rights (TOR) auction is being held on November 6 and the 6th production sharing round will take place on November 7.
After the TOR auction today, Brazil could see its oil reserves double to 30 billion barrels of oil equivalent, Reuters quoted the minister as saying.
Production in Brazil is rapidly growing thanks to start-ups of new offshore oil fields. Total liquids production increased by 480,000 bpd year on year to 3.10 million bpd in August—a record high, according to Energy Aspects. Crude oil production in Brazil jumped by 220,000 bpd on the month to 2.99 million bpd in August, thanks to rising production in the pre-salt layers.
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According to OPEC’s estimates in its latest Monthly Oil Market Report (MOMR), the 2.99-million-bpd crude oil production in August was an all-time high for Brazil.
The cartel estimates that Brazil will be the second-largest contributor to non-OPEC supply growth this year and next, 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.
OPEC’s top producer and de facto leader Saudi Arabia has informally asked Brazil to join the organization, Brazilian President Jair Bolsonaro said last week, adding that he would personally like his country to be a member of the Organization of the Petroleum Exporting Countries.
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.
With a low reserve base of 13.4 billion barrels (bb), an extremely challenging oil province and very costly pre-salt oil to produce, it is virtually impossible for Brazil to raise its production beyond 4.0 mbd in the next 10 years.
New oil auctions will not add to Brazil’s reserves since they were offered for licencing based on the reserves that already have. Still, the oil auction held on the 6th of November was hardly a great success with many oil majors including American oil giant ExxonMobil not participating.
And although it was reported that Saudi Arabia the de facto leader of OPEC has informally asked Brazil to join the organization, there is little chance that Brazil will do so because the major oil companies who took part in the oil auction would object to have their future production restricted by OPEC production cuts.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London