EUCERS/ISD/KAS Energy Talks 2015:
Brazil’s Emergence as an Energy Superpower:
A newly-born protagonist in the American Continent?
By Flávio Lira, KAS fellow at EUCERS
Brazil has been a great energy producer and consumer for decades. The country ranks as the
world’s 8th largest energy consumer and 10th largest producer according to the EIA (2014) and,
in the Americas, it ranks third among consumers, behind the US and Canada.
Brazil is the largest producer of oil in South America. E&P activities are heavily concentrated in
the hands of Petrobras, the state-owned national oil corporation, which, until 1997, held a
monopoly on such operations which are now open to domestic and foreign companies. Brazilian
liquid fuel consumption reached 2.7 million barrels per day (bbl/d) in 2014 (2 million bbl/d of
crude oil and 527 thousand bbl/d of biofuels) whereas consumption surpassed 3 million bbl/d.
Brazil has a substantial share of its energy mix composed of ethanol (19%) following a national
policy initiated in the 1970’s.
Brazil is expected to start exporting oil as soon as production in the pre-salt layer is boosted. The
pre-salt layer has been celebrated as the most relevant discovery of offshore oil in recent years
and can not only take the country towards energy independence but also make it an exporter of
up to 2 million bbl/d of oil by 2022. Natural gas accounted for 8% of Brazil’s total energy
consumption and its production is expected to increase in the future.
Brazil’s crude oil is mostly heavy. China is currently the biggest importer of Brazilian crude
(115,000 bbl/d in 2013) followed by the US and India. Central and South America account for
only 12% of the country’s crude oil exports. Brazil’s refining sector is not able to deal with its
own crude in a massive way, which causes the country to rely considerably on imports of
petroleum products.
When it comes to electricity, Brazil has a generating capacity of 133.9 gigawatts (MINISTÉRIO
DE MINAS E ENERGIA, 2015) and hydroelectricity alone accounts for 66% of it. The country
has a long tradition of hydroelectric generation and projects for improving existing facilities as
well as building new ones have been met with both praise and criticism due to their innovation,
on the one hand, and negative environmental impact on the other. State-owned company
Eletrobras plays an important role in the electricity sector, even after significant privatisation
efforts in the 1990s/2000s.
Brazil’s biggest energy challenge relates to its fossil fuel industry and whether it will be able to
develop its downstream capabilities while new discoveries are being made. Foreign companies
have been important players through the country’s usual E&P contract models, both the
concession regimes and the more recent PSA ones. From a European perspective, having a stable
and reliable energy management in Brazil is important for two reasons: first, it integrates Brazil
and South America further into a world energy continuum of supply and demand, keeping an
extra source that is relevant in cases of shortage of oil and natural gas elsewhere. Secondly, it
will operate in an order of local stability promotion, not only trade-wise but also economically
and politically, which is in the interest of both sides of the Atlantic. Brazil’s contribution to an
energetically solid American Continent concerns good relations with its neighbours, which are
both buyers and suppliers in mutual interaction, which means foreign policy is key to an
increasingly integrated South American energy grid in the future. With few cases of accusations
or unrest, the country’s energy relations with its vicinity is rather nonviolent, which contributes
to a peaceful region in a broader geopolitical sense, notwithstanding the forecast of larger
demand both from surrounding countries and Brazil itself.
The third EUCERS/ISD/KAS Energy Talk in 2015 will address the characteristics of Brazil’s
energy mix (oil/natural gas, hydrocarbon and biofuels) and give an overview of the current
political and economic conditions pertaining to its energy sector as a whole. We will also discuss
the challenges of and possibilities for Brasilia, Brussels, international oil companies and
investors in light of the country's newly discovered pre-salt fields and pending hydroelectric
megaprojects.
Sources:
EIA - U.S. ENERGY INFORMATION ADMINISTRATION. Analysis: Brazil. 2014.
Available on: <http://www.eia.gov/beta/international/analisys.cfm?iso=BRA>. Retrieved:
19/06/2015.
Ministério de Minas e Energia. ____________. 2015. Available on:
<http://www.mme.gov/br/documents/1138787/0/Capacidade+Instalada+de+EE+2014.pdf>.
Retrieved: 17/06/2015.