Recovery in Brazil under way

UPSTREAM
FRIDAY 26TH JULY 2019

Recovery in Brazil under way

Grounded in a spirit of realism rather than euphoria, the recovery in Brazil’s oil sector is gathering strength, writes Gareth Chetwynd.
Investments in big pre-salt assets may grab the headlines, but growing interest in assets in mature basins provides an interesting barometer of success.
Buyers of Petrobras assets are gradually learning to navigate rules that, though something of a procedural minefield, were an understandable reaction to the rampant corruption exposed by the Car Wash investigation.
Growing interest in onshore areas is music to the ears of Brazilian regulators, who have worked hard to breathe life into a sector long mummified by the suffocating presence of the national oil company.
Credit for the improvement is owed to Decio Oddone, director general of the Brazilian hydrocarbons regulator ANP, whose clever thinking on issues such as local content, open-door licensing and reserves-based lending will be crucial for unlocking investments.
Oddone will stand down at the end of his mandate in December 2020. He may do so without overseeing a solution to a crucial issue — highly organised truckers have discovered their muscle in an economy that is heavily reliant on road haulage.
President Jair Bolsonaro has demonstrated populist instincts when faced by the truckers’ challenge, deterring Petrobras from planned price hikes. If international oil prices rally, Bolsonaro may have to make some hard choices. Hopefully, his choice for the next ANP boss will reinforce the commitment to strong and independent regulatory agencies.
@energia @petróleo