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| Wed, 3rd Mar 2021 17:00:00 |
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Is This The World’s Next Big Offshore Oil Region? |
The COVID-19 pandemic, 2020 crude oil price crash and ongoing global petroleum supply glut have done little to slow the growth of South America’s massive offshore oil boom. The colossal oil boom underway in the tiny South American nation of Guyana is gaining momentum, while Suriname is on the cusp of experiencing its own and the region’s largest economy Brazil is now the world’s tenth largest oil producer. It is their booming offshore oil industries which will be responsible for South America becoming the world’s leading offshore petroleum producing regions, even surpassing North America. Despite the COVID-19 pandemic and 2020 oil price crash, Brazil’s offshore oil industry experienced strong growth. Annual average hydrocarbon output grew 5% year over year to barrels of oil equivalent daily. It was Brazil’s pre-salt oilfields and national oil company Petrobras’ focus on developing those ultra-deep-water fields which was responsible for that healthy growth. Pre-salt oil output soared by almost 18% to 2.6 million barrels daily to make up 69% of Brazil’s total hydrocarbon output. Petrobras announced its best-yet operational results, including record exports and annual average oil production of 2.28 million barrels per day. For January 2021, Brazil’s national oil company’s exports reached a new peak of 19.3 million barrels through its Angra dos Reis terminal.
Unflagging demand from China, even at the height of the global pandemic, was responsible for Brazil’s strong 2020 performance. Latin America’s largest oil producer, by the end of 2020, was the fourth largest petroleum supplier to the world’s second largest economy. This can be attributed, in part, to the January 2020 introduction of IMO2020 which significantly reduced the sulfur content of maritime fuels causing the popularity of Brazil’s pre-salt Buzios and Lula crude oil varieties to soar. It is the attractive economics of Brazil’s pre-salt oil region which will drive greater investment and production growth. Many of those assets are pumping sweet medium grade crude oil at a breakeven price of $35 per barrel or even less, making them highly profitable in an operating environment where Brent is expected to average $60 to $70 per barrel.
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