Petrobras Divestment Policy Faces Criticism, Specialist Responds: “Petrobras’ Success Will Benefit Brazil and Brazilians”

Some Sectors That Criticize Petrobras’ New Business Model Are Ideological Statists And Do Not Align With The Interests Of The State-Owned Company And Brazil, Says Prof. Cleveland M. Jones

Regarding the recent article on Click Oil and Gas (Click Oil and Gas, 2020) that presents criticisms of Petrobras’ divestment policy, including claiming that it could turn Brazil into a “Nigeria,” it is important to separate the ideological statist positioning of some sectors, opposed to any divestment by Petrobras, from an evaluation of the strategies and business tactics that promote the interests of Petrobras and the nation.

Indeed, although the interests of Brazil and Petrobras are not identical and do not coincide in all aspects, since Petrobras is not a 100% state-owned company, there are many points of convergence.

Among these, the most important is that Petrobras’ success will benefit Brazil and Brazilians, as the Union is the largest shareholder of the company. The comments cited in the article ignore the market reality, which recognizes the correctness of the policy and divestment actions of Petrobras, producing a significant recent appreciation of its shares, including in relation to other majors in the O&G industry.

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Another reality in Brazil is that there is no way to replace Petrobras’ experience and knowledge with a state-owned company, managed and run by bureaucrats in Brasília. What can be expected is that the government allows Petrobras to play its role as an oil company, and that the Union, in favor of national interests, establishes policies in the energy and oil sectors, that direct the actions of all players in Brazil towards the desired objectives.

On the other hand, it would be absurd to imagine that Petrobras seeks objectives that would hinder the development of the oil resources it controls. Certainly, Petrobras seeks to optimize its performance in developing these resources. However, ignoring the global pressures that these companies are subject to does not help us face the new global scenario of the O&G industry.

We must indeed value Petrobras’ operational efficiency and its success and performance as a company. Brazil’s good strategic positioning, in relation to other oil regions in the world, was the subject of a recent article (Jones, 2020), which highlights Brazil’s enormous advantage. This advantage should not be squandered or undone by populist policies that hinder Brazil’s ability to take advantage of the favorable winds blowing in our direction in the global O&G scenario.

One of the biggest risks Brazil faces, which the interviewees cited in the article do not seem to understand, is precisely slowing down the pace of developing Brazil’s immense oil resources, forcing the largest company in the sector to operate in a way that undermines its optimal performance. The oil resources of the pre-salt alone, where Petrobras is rightly focusing its efforts, have been estimated at 176 to 273 billion barrels of recoverable oil equivalent (Jones & Chaves, 2015). If Brazil cannot quickly increase its oil production, there is a high chance that much of these resources will remain untapped, without being produced and without generating wealth and benefits for Brazilians.

It would be necessary for Brazilian production to increase to something like 10 million bopd, and to maintain that level until the end of the century, just to produce this wealth from the pre-salt, without considering other Brazilian oil areas. However, the end of the oil era threatens the chances of demand for oil lasting until then, and in any case, we are far from reaching these levels of production.

Brazil needs, therefore, to stimulate its oil production. The best way to achieve this goal is to let Petrobras optimize its performance, focusing on the areas of greatest potential, such as deep waters and the pre-salt, where it has demonstrated expertise. Even if it wanted to operate across more fronts, Petrobras does not have the necessary capital to work in all the areas it holds. The national policy in the oil sector should be oriented to create conditions that attract national and foreign O&G companies, and their capital, to invest in the development of Brazil’s oil areas, including those in which Petrobras has chosen not to invest. And let each one seek the best possible performance.

About Prof. Cleveland M. Jones

Prof. Cleveland M. Jones, DSc., holds a degree in Physics and Economics (Cornell University, Ithaca, NY, USA, 1974), postgraduate studies in Oil and Natural Gas Engineering (UERJ – 2007), and a master’s degree (2009 – basin analysis and mobile belts) and doctorate (2014 – MEOR – Microbial Enhanced Oil Recovery) in Geology from UERJ. He is currently a researcher at INOG (National Institute of Oil and Gas – INCT/CNPq). He is an independent international consultant, providing services in Brazil and abroad for Public Prosecutors’ Offices and multinational and oil companies. He is a member of the Geosciences Advisory Board of NXT Energy Solutions Inc., Canada. He has experience in the fields of Energy, Sanitation, Sustainable Development, and Environmental Audit and Assessment. He was the founder and director of several environmental and biotechnology companies and Coordinator of the Postgraduate Course in Environmental Management (FUNCEFET-RJ). He mainly works on the following topics: geopolitics of oil and energy, assessment of energy resources (yet-to-find-oil), applied biotechnology (bioaugmentation, bioremediation, and MEOR), socio-environmental diagnostics, wastewater treatment, solid waste, and shrimp farming. A frequent speaker and author of various articles on energy resources, the environment, and applied biotechnology. Fluent in Portuguese, English, and Spanish. A member of various professional organizations in Brazil and abroad, and a member of Mensa Brazil. Currently involved in evaluating the potential for new discoveries in Brazil’s pre-salt and studying the geopolitics of oil.

Full Curriculum: http://buscatextual.cnpq.br/buscatextual/visualizacv.do?id=K4744604Y6

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