Brazilian oil production will peak until the end of the 2030s, says BP

Sept 15, 2020

Brazilian oil production will grow rapidly in the coming decades, from the current level of 3 million barrels / day to a peak of 4.3 million to 5 million barrels daily, according to estimates of “Energy Outlook 2020”, published on Monday by British oil company BP. Even with the growth in oil production, the expectation is that renewable energies will gain space in the Brazilian energy matrix.

BP predicts that, in a scenario of rapid energy transition to a low carbon economy, the peak of oil production in Brazil will be registered as early as the end of the 2020s. In the more moderate transition scenario, called “business-as- usual ”, the peak will be reached at the end of the 2030s.

In all scenarios assumed by the British company, however, the share of renewable energies in the mix of primary energy consumed in the Brazilian market will grow rapidly, from 15% in 2018 to between 32% (in business-as-usual) and 54% (in third scenario, more aggressive of energy transition, called “net zero”) in 2050. The projections do not include the water source. Oil, on the other hand, will gradually lose its relevance in all three scenarios, failing to account for 39% of the matrix in 2018 to be limited to 7% to 28%, depending on the speed of the transition.

The multinational also projects that nuclear energy will be the second to grow faster, between 3.4% and 4.8% per year in the country. BP also believes that Brazil will continue to be one of the largest hydroelectric producers in the world. The forecast is that the participation of hydropower in the national energy matrix, which was 28% in 2018, is between 21% and 26%.

In the scenario of rapid energy transition, BP predicts that the production of biofuels will more than double by 2035, reaching the level of 1.3 million barrels / day. In the most modest scenario, this level reaches 900 thousand barrels / day in the 2040s.

BP’s chief economist, Spencer Dale, said today that he believes in a significant growth in biofuels in the country. “Brazil is the Saudi Arabia of biofuels,” he said, during the global presentation of the study, comparing the Brazilian potential in biofuels with the Arab potential in the oil sector. “We hope to be there [in Brazil] for a long time,” he added.

BP assumes as a premise a growth of 1.7% per year of the Brazilian economy between 2018 and 2050, a level below the expected expansion for world GDP (2.6% per year). The expectation is that primary energy consumption in Brazil will grow between 60% and 66% by 2050 and that the use of energy per capita will increase by around 50%.

Electric demand, in turn, is expected to more than double by 2050. Most of the growth in primary energy demand will come from the industrial sector, followed by the transport sector. The share of renewables in the electric matrix will rise from 17% in 2018 to between 45% and 51%.

Covid-19

BP believes that the economic impacts of the covid-19 pandemic will reduce energy demand by 2.5% in 2025 and 3% in 2050. In a scenario where these effects are more aggressive, the crisis is expected to bring the level energy demand to an 8% lower level in 2050.

The company predicts that, in a scenario of rapid energy transition to a low carbon economy, the impacts of the pandemic will be more pronounced on oil consumption, which could be 3 million barrels / day lower in 2025 and 2 million barrels / day in 2050 as a result of covid-19.

Most of this reduction, according to BP, reflects a weaker economic environment. In the most aggressive pandemic impact scenario, the drop could reach 5 million barrels / day in 2050.

BP assumes that global economic activity is expected to partially recover in the coming years from the impact of the covid-19 pandemic, as restrictions on the movement of personnel are eased. BP believes, however, that some effects will persist.

The British company assumes as a premise a global GDP growth of 2.6% per year, a level “considerably slower than the average of the last 20 years, partly reflecting the persistent impact of covid-19 on economic activity”.

According to BP, economic impacts will mainly affect emerging economies such as Brazil, India and Africa.

The British oil company also believes that the pandemic will bring behavioral changes, for example, in the public use of transport. “Many of these behavioral changes tend to dissipate over time, as the pandemic is controlled and public confidence is restored, but some changes, such as increased work at home, may persist,” quotes the BP study.

The company also points out that the effects of the pandemic can lead to a process of “deglobalization”, as countries seek to increase their resilience by becoming less dependent on imported goods and as companies choose to change their supply chains. , bringing them closer to your facility.

The reduced opening of the global economy may lead to a slight reduction (0.2 percentage points) in the global GDP growth trend. The demand for energy, in this case, may be 5% lower in 2050.

Source: Valor

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