Here at Ten Live we have absolutely loved Rio 2016 !

Now that the Games have come to a close, what next for  Rio and Brazil? Over the past few years the Brazilian economy has been facing one of its most difficult economic periods, with the return of inflation, currency devaluation, an increase of public deficit and the downgrading of the country’s credit ratings by the S&P (1). 

However, there are “tentative signs of improvement emerging from Brazil’s battered economy. In June 2016 Industrial production accelerated and consumer and business confidence continued to improve in July” (2). A longer term forecast shows by 2020 GDP is forecast to increase by 1.5% from -0.3% currently, unemployment is forecast to decline from 11.3% to 7.2%  and inflation to decrease from 8.74% to 3.2% (3)

What lies ahead for Brazil oil & gas in 2016 ?

The drop in oil prices has greatly impacted the offshore sector globally resulting in budget cutbacks, project delays and divestment of assets for many of the world’s major oil & gas companies.  

In Brazil however, despite the oil price collapse, “….more offshore oil and gas projects will begin in Brazil than any other country through 2025, of 236 new offshore drilling projects worldwide in 2016, 40 will take place in Brazilian waters, with an estimated 13.3bn barrels of commercially recoverable reserves from announced projects in offshore Brazil. To put this in perspective, planned offshore projects in Norway, United States, the UK and Nigeria total 12.9bn barrels commercially recoverable reserves altogether”(4). Furthermore,industry experts say “….Brazil’s offshore oil reserves can break-even between $35 and $45 a barrel if drilled efficiently” (5). 

Brazilian Government Moves To Increase (Foreign)  Investment In Brazil Oil & Gas

With Brazil’s recent debt crises and corruption scandals there has been a consequent reduction on its investment capacity.  Crucially therefore, Brazil’s government is now looking to take steps to encourage investment by oil & gas companies to start investing once more in offshore Brazil.

Since 2010 when significant pre-salt layer discoveries represented the opportunity for Brazil to become one of  the main players in the global oil & gas industry, Petrobras (the Brazilian state controlled oil company) has held a number of  E&P responsibilities and privileges in the Brazilian pre-salt layer, significantly having been appointed as sole operator in any pre-salt layer and strategic areas with at least 30% interest participation (6). 

Now in 2016, in order to attract investments, the Brazilian government has  been discussing necessary changes in the regulatory framework and restrictive policies for different sectors, including the oil and natural gas industry , most notably  aiming to extinguish the mandatory legal requirements which currently allow Petrobras to act as the sole operator. In February 2016 a preliminary approval of a Senate Bill was heralded by many within the Brazilian oil industry as an important step to attracting the return of investments by oil companies, especially foreign oil companies, to Brazil.

Petrobras Divesting Assets, Increasing Investments

Coupled with the above planned regulatory framework changes, Petrobras has a divestiture plan, under its business and management plan of 2015-2019 and  intends to proceed with divestments of assets which is expected to yield US$15bn during 2015-2016. A  further US$42.6bn will be realised from 2017-18 from business restructurings, demobilisation of assets and additional divestments, all of which will create new investment opportunities (7).

Petrobras’s subsidiary responsible for the network of gas pipelines is also expected to be sold, which would “…represent major progress in the verticalisation of the Brazilian natural gas industry”  as Petrobras currently dominates the production, transportation and supply of natural gas. “…. any divestment in the gas transport division of Petrobras and the consequent decline of Petrobras’ market share in the natural gas chain represents a very different environment for investments in the Brazilian natural gas industry, since it would lead to more transparency in gas prices“.

 Looking For Top Talent  in the Oil & Gas Sector ? 

Ten Live is a multi award-winning, independent, Scottish global oil & gas talent acquisition and management firm and has been operating  in Brazil since 2013. 

Contact our oil & gas recruitment director Joanne Telfer. E-mail  joanne@tenlivegroup.com  or call mobile  +44 7547 761779  

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Ten Live are delighted to announce we have once again been accredited in January 2016 with the globally-recognised and respected quality management standard  ISO 9001 (ISO 9001:2008) certification for another year running by our third party certification auditor URS.

At Ten Live We are extremely proud of the excellent processes and systems we have in place and which we continually seek to  improve through all our ISO  accreditations including  ISO 9001:2008, ISO 14001: 2004 Environmental Management and  ISO 18001 : 2007  Health & Safety Management .

Ten Live  also offer ISO certified consultancy and training courses by qualified industry experts. For further information on our ISO-certified consultancy and training courses and our Engage©  programme please contact Joanne Telfer, our QMS specialist, on 01236 702007 or e-mail joanne@tenlivegroup.com

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(1, 2)9.8.16  http://www.focus-economics.com/countries/brazil

(3) August 2016 http://www.tradingeconomics.com/brazil/forecast

(4) 8.8.16 http://www.houstonchronicle.com/business/outside-the-boardroom/article/Brazil-s-oil-and-gas-business-outshines-the-9128969.php

(5, 6,7) April 2016 http://www.financierworldwide.com/changes-to-brazilian-oil-and-gas-industry-regulations-better-now-than-never/#.V7sYsvkrLIU