Brazil: High Expectations Has Brazil's Oil Industry Left the Crisis Behind?

The change in the regulatory framework and the new rounds of auctions of pre-salt oil attracted not only large companies in the market and brought approximately $ 7 billion to Brazil in two years, says the Brazilian Institute of Petroleum, Gas and Biofuels (IBP). In the next few years, the industry is expected to create 400 thousand new jobs and bring $ 258 billion more in investment to the country. The Secretary General of the IBP, Milton Costa Filho, spoke with Rio Press Office.

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Rio de Janeiro/Brazil — According to Milton Costa Filho, there are several factors that point to a strong recovery in the whole world and in Brazil. The most important thing was the drop-in oil prices, which reached the lowest level in February 2016. The industry had experienced great supply and the energy transition resulted in the arrival of other very competitive energies, he argued. These factors contributed to bring down oil prices. But now, the problems of some countries to recover the production and the strong demand — with the world GDP on the rise — had changed this scenario. The crisis had lasted almost four years and caused the industry to rethink the business model, cutting costs and seeking new technologies and ways to work to be more competitive. Now, the industry would be on a new level. The Secretary General added, that all oil companies were in a very good position for this new reality. They were prepared to operate in challenging conditions, which included the pre-salt oil and the American unconventional oil.

Concerning the pre-salt oil, in September, the Brazilian industry held the fifth round of auctions. In Milton Costa Filho's view. this round successfully crowned a process of changes in regulations that had made the industry attractive for investments. He said that Brazid has one of the three most competitive areas in the world: the pre-salt. The others were the American unconventional and the Middle East. The auctions attracted very large and very bold bids.

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Filho said that the country's oil industry received commitments for investments amounting to tens of millions of dollars. The federal government raised a total of almost $ 7 billion. Now, the most important thing was the commitment from these companies to develop and produce oil. In five years, Brazil would be able to increase production by about 2 million barrels, and in ten years, add another 6 or 7 million. He expects around 400,000 new jobs to result from these investments.

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