Overview

Brazil is no longer a bright prospect, but a potential upstream phenomenon-in-waiting. Production from its offshore ’pre-salt‘ reserves in the deep waters of the Atlantic Ocean are poised to boom this decade. The discoveries began in 1997 in the Santos Basin and have since extended into the neighbouring Campos and Espíritu Santo basins, opening a new frontier with tremendous opportunities and challenges.

Petrobras, the national Brazilian oil and gas company, is making analogies with the early days of North Sea production in 1999, forecasting daily oil production of 6.4 million barrels of oil equivalent per day (boe/d) by 2020.

Brazil liberalised its oil and gas sector in 1997, allowing private and foreign competition, but state-controlled Petrobras, which was created in 1953, will reap most of the pre-salt rewards. The legislative environment has been constructed in favour of Petrobras, which accounts for about 95% of Brazil's oil and gas production.

Gas production has a very small profile compared with that of oil at the moment, but gas reserves will be increasingly unlocked. Brazil's Ministry of Energy and Mining has said it expects gas production in the country to increase by 280% by 2020, which would lift Brazil's gas production to approximately 55 billion cubic metres.

Pre-salt promise means gas exploration and production in Brazil is geographically asymmetrical. Around 80% of the country's gas reserves are offshore, and the waters off the state of Rio de Janeiro, which include most of the prolific Campos and Santos basins, account for about 45% of these reserves.

Gas is desperately needed in Brazil to accommodate the country’s soaring domestic demand. Brazil is the largest energy consumer in Latin America and the largest in the Western Hemisphere after the US and Canada. At present, gas constitutes only a small portion of Brazil's total energy consumption. As the country waits for its production boom, it relies on imports, which come primarily via pipeline from Bolivia, although LNG is catching up. The country will add a third LNG regasification terminal in 2013. Brazil consumes 70% more gas than it produces. It is expecting demand growth of around 4.3% per year over the next 20 years.

Profile first uploaded: 18/10/2012