(Reuters) – As Brazil’s state-controlled Petrobras PETR4.SA rapidly boosts oil output and exports, executives are looking to a new market: India.
In an interview as part of the Reuters Commodity Trading Summit, Chief Executive Roberto Castello Branco said that crude sales to China – an increasingly vital export market for Brazilian oil – would continue to rise amid strong industrial growth there and the ramping up of some of the world’s largest offshore fields in Brazil.
But Petrobras’ newly reorganized marketing and logistics division is actively scouting out additional markets, particularly in Asia.
The firm, for instance, has started hunting for new buyers in India, which Petroleo Brasileiro SA, as the company is formally known, hopes will be a relevant client within three years as it moves to diversify its buyer mix and minimize its dependence on China.
“We expect this to have a positive evolution in the near future, in three years approximately to have a consolidated position in the (Indian) market,” Castello Branco told Reuters.
The company has also been raising fuel oil exports to Singapore. The country, which acts as a shipping hub, has boosted purchases of Petrobras’s low-sulfur fuel to comply with new maritime legislation intended to reduce greenhouse gas emissions. Production from its massive, deepwater Buzios field is widening Brazil’s oil surplus and allowed Petrobras to raise its 2020 production target by 5% in the past weeks.
The producer is also preparing to face stronger internal competition as it sells refineries and tries to end its near monopoly in Brazilian fuel production. “In order to face stronger competition, we put in place a logistics, sales and marketing division…to act as an active seller, not a passive seller,” the CEO said. Despite having recently risen to third largest oil supplier to China, ahead of the United States, Brazil is still a relatively small seller to the Asian country compared with Russia and Saudi Arabia, Castello Branco said – but not for the lack of appetite. China would absorb all oil Brazil has to offer and it often pays a premium for its sweet crude from Brazil’s Tupi field, he said. In April, Petrobras hit an historical mark of 1 million barrels per day of crude shipped to China as a sharp drop in internal fuel consumption diverted oil away from domestic refineries. “Right now, we don’t have the capacity to sell 1 million (barrels per day),” Castello Branco said. “With the increase in oil production, we will have availability to do that”.