With Petrobras stepping on the brakes on investments and selling more assets, foreign oil companies are gaining ground in Brazil. Together, Shell, Repsol Sinopec, Petrogal and TotalEnergies already account for 20% of national oil and gas production. Together, the private sector now accounts for 27% of the total, according to data from the National Agency for Petroleum, Natural Gas and Biofuels (ANP).
The new portrait of the industry also reveals the transfer of investments to the pre-salt layer and the drop in the number of reservoir discoveries. The distribution of royalties between municipalities also changed.
Representative of large oil companies, the Brazilian Institute of Oil and Gas (IBP) expects the participation of foreign companies to grow even more as the pre-salt advances.
Petrobras’ investments have been falling since 2014, when the company became the target of allegations of corruption in Operation Lava Jato, the price of oil plummeted and its indebtedness exceeded US$ 100 billion. Its managers reduced investments, which went from US$236.7 billion (for the period 2014 to 2018) to the current US$55 billion (from 2021 to 2025).
The state-owned company abandoned its plan to be a chain-integrated company, sold onshore and shallow water fields and put less money into exploring new reserves, which would account for future discoveries. There have been few acquisitions in recent years, except in giant pre-salt areas in the Santos Basin, such as in Búzios, considered its best asset.
Petrobras’ share in domestic production went from 84% in April 2016 to 73% in the same month this year, a drop of 11 percentage points in five years. On the other hand, Shell’s, which five years ago accounted for 7% of domestic oil and gas production, now has 12%. Part of this advance is due to the purchase of BG, in 2016. Next, appear Petrogal (whose share rose from 1.4% to 3.4%) and TotalEnergies, which went from zero to almost 2%. Repsol Sinopec is in fourth place, but the volume extracted by it fell 0.2% in the period.
There are also a number of large foreign companies – such as Chevron, Equinor and Exxon, which are betting on deep water fields, including the post-salt – and Brazilian companies, such as Enauta, PetroRio and Dommo, which have been growing mainly with the purchase of Petrobras areas.
Petrobras said that the growth of foreign competitors in the market was “natural”, “as well as the entry of new companies in assets sold”. The state-owned company works to maintain its leadership in oil and gas production in deep and ultra-deep waters, including the pre-salt, as informed by its press office.
The state-owned company stated that acting in society is a solution to reduce exposure to risk and add the knowledge and capital of the partners. According to the company, this business model helps the company to “be present in a greater number of opportunities and add competence”.
Petrobras argues that its oil production has grown in recent years, with the exception of 2018, and that it should maintain its leadership in the refining segment, even after disposing of half of its oil production capacity. “Petrobras will continue to be the largest integrated company in Brazil, using its park to maximize returns and optimize its operations,” he said.
Shell, through its advisory, claimed to have assets in Brazil, in all phases, from exploration to demobilization of platforms. Two of them are in the production phase: Parque das Conchas and Bijupirá-Salema, in the Campos Basin. “We are also planning for this year an exploratory well in block CM-791, in the Campos Basin, awarded in the 15th concession round (in 2018), which demonstrates that our interest goes beyond the pre-salt”, he highlighted.
TotalEnergies, on the other hand, claimed to have a “long-term commitment to Brazil” and that the country “offers great opportunities, especially in the pre-salt”. The company plans to invest US$ 500 million per year in exploration and production until 2024 and increase the volume extracted to 150,000 barrels per day in the future.
Norwegian Equinor, the seventh largest national producer, said that Brazil is strategic for her. “Since 2001, Equinor has been building a strong local organization,” the company said in response to Estadão/Broadcast. “The company has invested more than US$ 11 billion in Brazil so far and expects to invest another US$ 15 billion by 2030,” he added.
For William Nozaki, coordinator of the Institute for Strategic Studies in Oil, Natural Gas and Biofuels (Ineep), the Petrobras retraction has important negative impacts on production. “The first effect is the reduction in the average rate of total investment, as foreign companies have invested less and are not compensating for the state’s retraction. In addition, production outside the Santos Basin (where the pre-salt is located) has dropped.
In the Campos Basin, for example, Shell, Equinor, Dommo reduced the volume extracted, and Chevron stopped being an operator last year (the company has a stake in a field),” he said.
Oil and Gas specialist Luciano Losekann, a professor at the Fluminense Federal University (UFF), highlights the importance of continuing investment to maintain royalty income. Rio de Janeiro remains the most favored state. Internally, however, the collection of financial compensation migrates from the north of Rio de Janeiro to the metropolitan region. At the top of the list of the most benefited are, now, the cities of Maricá and Niterói.