Brazil's Energy Industry

Brazil: a model for offshore development

Brazil’s oil and gas sector has grown significantly due to the country’s massive hydrocarbons potential. The nation has the second-largest proven oil reserves in South America after Venezuela, with more than 95% of its oil and gas offshore. The nation boasts the largest recoverable ultra-deep oil reserves in the world, with the International Energy Agency forecasting that 50% of the world’s offshore oil could come from Brazil in 2040.

The industry is overseen by the National Agency of Petroleum, Natural Gas and Biofuels, known as ANP, which hands out exploration and production licences and ensures compliance with state regulations. Hydrocarbons are produced predominantly by NOC Petrobras. The company held a monopoly on the industry for around 40 years until the market opened up in 1997. Since then, the sector has attracted super-majors such as Shell, ExxonMobil, Chevron and TotalEnergies and local independents.

Rising upstream output has supported broader investment, while reforms and divestments have attracted new entrants to refining and marketing. To attract FDI and participation in the market, Petrobras has divested some refining assets in recent years, though it remains the dominant refiner. While Petrobras remains the largest player in the local downstream sector, with new entrants including domestic private refiners and fuel distributors, alongside some international participants.

Due to the country’s large size, a vast pipeline infrastructure is necessary to link the various oil-producing regions, refineries, terminals and distribution points. Most of the country’s pipelines are located in the southeast and northeast of the country. Midstream regulation and oversight involve ANP and the Ministry of Mines and Energy (with EPE supporting planning and studies).

While still one of the world’s largest oil and gas producers, Brazil’s renewable energy sector has seen titanic growth and accounts for around 80% of the country’s power generation mix, predominantly through its hydropower stations and biofuels and waste facilities. Brazil is among the world’s largest hydroelectricity producers. The government is looking to grow the mix of solar and wind facilities to meet its large potential and avoid losses caused by droughts.