Brazil cannot immediately increase oil production, says ANP

Brazil hopes to gradually add three million barrels a day of oil and gas to its production this decade, but cannot accelerate those plans to offset the ban on the Russian product, Rodolfo Saboia, director general of the ANP (National Oil, Natural Gas and Biofuels).

One of the biggest non-OPEC oil producers, the South American country is expected to significantly increase oil production over the next two years, at a time when buyers are looking for supplies to replace Russian crude, rejected due to the Ukraine invasion.

Global demand for oil is around one hundred million barrels a day. The spread of bans on Russian supplies since the invasion of Ukraine could push up commodity prices even further. Russia, which calls its action in Ukraine a “special operation”, supplies about seven to eight million barrels a day of crude oil and derivatives.

This month, US Energy Secretary Jennifer Granholm called her correspondent in Brazil asking for quicker increases, the Ministry of Mines and Energy said. The US also contacted local producers, as well as Venezuela and the Middle East.

Brazil’s geological and supply chain constraints mean it can take up to 10 years to get new projects into production, Saboia said.

Brazilian oil mainly comes from deepwater fields that require expensive platforms and subsea components, he added.

“Production will grow, but there is not much we can do to speed it up,” Saboia told Reuters.

State oil company Petrobras plans to install 15 offshore production platforms by 2026, said the company’s head of production, João Henrique Rittershaussen. The units will increase capacity by 2.425 million bpd (barrels per day) of crude oil.

While most platforms are ready or under construction, only one — capable of pumping 180,000 bpd of crude oil — is scheduled to start operations this year, Rittershaussen said.

Another five platforms, with a combined capacity of 630,000 bpd of oil, are scheduled to start operating next year, he said. But production is not instantaneous.

“It takes almost a full year to reach full capacity on a platform like this,” said Rittershaussen.

Oil prices rise more than $4 amid possible EU embargo on Russia

Oil prices rose more than US$4 (R$20) on Monday (21), with Brent quoted above US$111 (R$559) a barrel, as European Union countries consider joining the United States. United in an embargo on Russian oil and after a weekend attack on Saudi oil facilities.

Brent crude futures were up $4.48 (BRL 22), or 4.18%, to $112.48 (BRL 566) a barrel at 9:50 a.m. ET, after a rise of 1 .2% last Friday (18).

U.S. crude oil (WTI) contracts rose $4.12, or 4%, to around $109, extending last Friday’s 1.7% rise.

Prices rose ahead of talks this week between European Union governments and US President Joe Biden in a series of meetings aimed at strengthening the West’s response to Moscow’s invasion of Ukraine.

EU governments will consider imposing a Russian oil embargo.

With little sign of a easing of the conflict in Ukraine, the focus turned back to whether the market would be able to replace Russian supplies hit by sanctions.

Over the weekend, attacks by the Iran-aligned Houthi movement in Yemen caused a temporary drop in output at a Saudi Aramco refinery in Yanbu, stoking concern in a churning oil market.