Brazil oil output gushes, exports hinge on economy

Brazil’s growing oil output and prospecting are turning it into a key source of new crude in the Western Hemisphere, but whether this will bring a tangible increase in exports remains to be seen.

Analysts say any serious increase in petroleum exports would depend on economic growth in Latin America’s largest country, now picking up steam after years of stagnation and crises. Brazil achieved self-sufficiency in crude last year and is slowly growing as a net exporter.
“If Brazil really starts growing at higher rates, maintaining self-sufficiency may become quite a challenge, and that is clearly the government’s priority,” said Francois Moreau, head of Estrategia e Valor consultancy in Rio.

Brazil’s state oil company, Petrobras, projects its crude output in Brazil should reach 2.37 million barrels per day in 2011, up a steep 27 percent from this year’s planned 1.86 million bpd, and then rise to 2.81 million bpd by 2015.

Meanwhile, the central bank expects the economy to expand 4.7 percent this year after a 3.7 percent rise in 2006. The government wants growth of 5 percent or more in the years to come.

Experts say that would require yearly oil and fuels output to rise by more than 5 percent, so Petrobras’ ambitious output growth plan is just about enough to meet that demand.

Analysts say high world oil prices, new technologies and Brazil’s economic and political stability have pushed the country from a second-tier oil province a few years ago into a booming producer with strong prospects.

“The prospects in terms of production are very positive — previously it was a challenging environment from a technical point of view, but Petrobras expertise and technology changed that,” said Ruaraidh Montgomery, a Brazil analyst with Wood Mackenzie consultants in Edinburgh.

Most of Brazil’s oil is heavy, found at great depths.

Reuters