Brazil is poised to sharply increase oil exports this year as heavy investments spur new output and demand for its lighter crudes win more buyers, especially in China and India.
Production is projected to rise 210,000 barrels per day (bpd) in 2017, second only in the size of additional supply to the United States among non-Opec producers. Higher output from the US and Brazil are among the factors impeding an Opec-led effort to lift crude prices through production cuts.
Growth in exports should continue in future years as companies such as Royal Dutch Shell prepare to tap some of the largest discoveries made since the end of the last decade off the nation’s Atlantic coast.
Already just in the first two months of the year, Brazil’s oil exports have soared 65 per cent over the same period a year earlier to record highs of more than 1.46 mbpd, according to government data obtained by Reuters.
Consultancy Wood Mackenzie estimates 2017 exports will hit nearly 1 mbpd, up from 798,000 bpd last year.
Years of heavy investment that left state-controlled Petróleo Brasileiro SA (Petrobras) as the world’s most indebted oil company are beginning to pay off. The nation hopes to use higher oil sales to help drag its economy out of a two-year recession.
Exports are rising along with the company’s output of light, sweet crudes, Guilherme Franca, executive manager for marketing and trading at Petrobras told Reuters.
"Our production consists of much lighter oil than we used to produce in the past," he said in an interview.
"We have demand for more of it than we can deliver."
Light, low-sulfur crudes are easier and cheaper to refine into gasoline and diesel, and match demands for less polluting fuels in Asia, the United States and Europe.
Franca said exports by Petrobras alone rose to 420,000 bpd in 2016 and should reach 450,000 bpd this year. If it meets future targets, the company could be exporting as much as 750,000 bpd as soon as 2020, he said.
In the first two months this year, Brazil sold 10.4 million barrels of crude to India, half as much as it shipped to the country during 2016, Brazil’s trade ministry data showed. Sales to China in January and February totaled 40.8 million barrels, up 125 per cent from the same period in 2016 and more than 10 times Brazil’s shipments to the country five years ago.
