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Massive money flight from Brazil – but Norwegian companies remain in the oil and gas industry
Brazil could see a decline in foreign investment of up to 40% in the oil and gas industry in 2020, Norwegian companies are investing more in the country even with the privatization of Petrobras.
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These were very stressful weeks, says Kjetil Solbrække, former head of Statoil in Brazil
He had just started his own oil and gas company and was buying his first oil fields when the corona pandemic hit.
But the deal with Brazilian state oil company Petrobras has been implemented and production from the fields in northern Brazil is already underway. Opportunities are still great in Brazil, says Solbrække.
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Petrobras is considered the largest gateway to the offshore market in the world in the oil and gas supply industry
Brazil is among the countries in the world hardest hit by the corona pandemic. This led to a sharp economic slowdown and massive capital flight from the country. According to experts, there could be a decline of up to 40% in foreign direct investment in the oil and gas industry in 2020. But the money flight started even before the pandemic hit the country.
One reason is that many investors are unsure where Brazil's controversial president, Jair Bolsonaro, will lead the country. This applies, among other things, to its climate and environmental policy, which worries international investors. Another reason for capital flight is that the authorities have drastically reduced interest rates. Thus, it is less profitable to have savings in Brazilian banks.
Right investment in the oil and gas industry
Norwegian companies have invested heavily in Brazil. With the exception of the EU and the US, this is the largest market for Norwegian investment abroad. More than a hundred Norwegian companies, including Equinor, Hydro, Aker Solutions, Statkraft, DOF and Yara, are established in the country. The Norwegian organizations claim that it will not be the privatization of Petrobras that will make them give up on investments in Brazil.
