Expert sees a strategic move linked to the Equatorial Margin; the government has adopted a pragmatic strategy toward oil and gas

Authorized by the National Energy Policy Council (CNPE), Brazil’s participation in the cooperation charter of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, OPEC+, has strategic implications that may be in line with the government’s stated intention to authorize further studies on oil exploration in the Equatorial Margin.

In the view of lawyer Tiago Lobão Cosenza, partner at LCFC Advogados and a specialist in Regulation and Energy, if estimates of large oil reserves in the region known as the mouth of the Amazon, 450 km off the coast of Amapá, are confirmed, “Brazil may establish itself as one of the world’s main oil exporters, increasing its influence in OPEC+ and in international energy negotiations”.

The Brazilian government has adopted a pragmatic strategy toward the oil and gas sector, seeking to maximize revenues without compromising production growth. Petrobras, in turn, remains focused on the pre-salt and, now, on the Equatorial Margin.

Greater global influence

In this scenario, joining OPEC+ may also be a step toward strengthening commercial and technological partnerships with other producing countries, as well as opening the way for new negotiations in the global energy sector.

If successful, this coordinated move would give the country more bargaining power in trade and diplomatic agreements, increasing its weight in relations with Asian and European markets.

In addition, observer member status means that Brazil is not required to follow production quotas imposed by OPEC, but can follow the discussions and negotiate its interests more closely with the world’s main producers, such as Saudi Arabia and Russia.

“It is no coincidence that President Lula recently confirmed his intention to authorize oil exploration in the Equatorial Margin. This is in line with Brazil joining OPEC+, because by consolidating new reserves and expanding production, the country can gain more weight in the organization’s discussions and influence global supply and demand dynamics,” said Cosenza.

Caution

Closer ties with nations that are major players in the energy market may increase international investors’ confidence in Brazil as a stable oil supplier, attracting capital for exploration and production. The country has established itself as a major exporter of crude oil, mainly due to the pre-salt, and this participation should carry weight mainly in discussions on production, pricing and the balance of the global oil market.

“Any effective accession by Brazil to OPEC should be assessed with caution from an economic perspective. Historically, countries outside the bloc have obtained significant economic advantages by not being bound by production limits,” noted lawyer Joaquim Augusto Melo de Queiroz, Life Sciences and Energy partner at Giamundo Neto Advogados.

“If Brazil eventually aligns itself with OPEC+ policies in the future, measures to restrict global supply may influence domestic fuel prices, affecting sectors such as transportation and industry,” Cosenza stressed.

Originally published by Exame (in Portuguese).