Brazil's reliance on foreign oil investment will rise

Subject

Brazilian oil sector outlook.

Significance

The difficult challenges faced by state-controlled oil company Petrobras in recent years have opened up space for new policies towards foreign investors. Key global producers have benefited from recent pre-salt layer auctions and oil concessions. These policies are likely to continue under the administration of new President Jair Bolsonaro.

Impacts

• Political resistance and the priority assigned to other reforms will make a Petrobras privatisation unlikely.
• Revenues from pre-salt auctions and foreign participation are set to increase.
• Oil price volatility in international markets will generate unstable domestic fuel pricing for final consumers.