Brazil considers entering into an oil cartel amid COP28 – 11/30/2023 – Environment

While the discussion of when the use of fossil fuels will end is at the center of COP28, the UN conference on climate change, in Dubai, Brazil signals that it intends to accept an invitation to join OPEC+, which brings together members of OPEC (Organization of Petroleum Exporting Countries) and allied producers.

This Thursday (30), the first day of COP28, the Minister of Mines and Energy, Alexandre Silveira, stated that Brazil wishes to join the entity. “We look forward to joining this distinguished group and working with all 23 countries in the coming months and years,” he said, meeting with OPEC+ members.

At the meeting, he also said that President Lula “confirmed our letter of cooperation” with the group from January 2024. When contacted, Palácio do Planalto informed in a note that the invitation, made during a visit by President Luiz Inácio Lula da Silva (PT) to Saudi Arabia, is for an “observer member” and the other details are being analyzed.

At this Thursday’s meeting, OPEC+, which works like a cartel, decided to promote a policy of voluntary cuts in its members’ oil production, which will result in a reduction of almost 2 million barrels of oil per day from 2024.

Production cuts promoted by OPEC+ tend to raise oil prices on the global market, and nations benefit from higher prices.

Brazil is currently eighth in the world in oil production. In March, Silveira announced plans to scale national production and make Brazil the fourth largest global producer. The region known as the equatorial margin, on the north coast of the country, is the new exploration frontier sought by Petrobras.

To contain the planet’s warming to 1.5°C, the goal of the Paris Agreement to avoid more extreme and more frequent climate events, the IEA (International Energy Agency) states that new oil and gas projects should not go ahead. Currently, the planet’s average temperature is already 1.2°C higher than in the pre-industrial period.

Experts consulted by Sheet criticize Brazil’s intention to join OPEC+, which contrasts with the image of environmental leadership that President Lula (PT) places in international speeches.

“Brazil in diplomacy has stated that it wants to be the ‘champion of 1.5°C’. In other words, to work with more ambitious but also safer scenarios for containing global warming”, says Natalie Unterstell, president of the Talanoa Institute .

Unterstell emphasizes that the 1.5°C scenario does not accommodate the oil production plans put forward by companies and countries with fossil fuel reserves — including Brazil — and that this invitation in the middle of COP28 becomes “embarrassing” for the Lula government.

“Brazil becoming a member of OPEC+ would be somewhat anachronistic in this decade or in previous ones. Now confirming this intention to become a member during a COP — and, in this case during the COP, which has fossil fuels at the center of the negotiations — is at least inappropriate,” he says.

This is not the first time that Brazil has been invited to join the group: the last time was in 2019, when former president Jair Bolsonaro (PL) announced an invitation made by Saudi Arabia, but the process did not proceed.

Contradiction

Stela Herschmann, climate policy specialist at the Climate Observatory, recalls that Brazil arrives with good results to present at COP28 in terms of deforestation in the Amazon, which, in general terms, is Brazil’s main source of greenhouse gas emissions. However, this is not enough.

“Brazil wants to be a global climate leader. Any global climate leader needs to have a firm and strong position on the elimination of fossil fuels”, he states.

“Any declaration of this type, of joining OPEC+, goes against what is expected from a country committed to decarbonization.”

The current government’s interest in intensifying oil exploration, despite the climate crisis, has already been made clear in Lula’s speeches. Regarding the research in the Foz do Amazonas basin, requested by Petrobras, the president has already said that he would like to “continue dreaming” about it, despite a refusal from Ibama (Brazilian Institute of the Environment and Renewable Natural Resources).

For Juliano Bueno de Araujo, technical director of the Oil and Gas Observatory and the Arayara International Institute, Brazil and President Lula act dubiously on environmental and climate issues.

“At one point, he places environmental protection at the outer political center of his government and, at the same time, accelerates fossil exploration,” says Araujo.

Camila Jardim, spokesperson for Greenpeace Brazil, also states that “taking advantage of his time at COP28 to join OPEC+ would be a wrong move” for Lula. “We hope that Lula leads by example rather than allying himself with the oil side of the force.”

Secretary of the MME (Ministry of Mines and Energy) during the Michel Temer government and president of ABPIP (Brazilian Association of Independent Oil and Gas Producers), Márcio Félix considers that it is necessary to look at an invitation of this kind from two angles.

“Brazil is big in this sector, it has growing production, it has become a super exporter. And look, it’s not just Petrobras. Giant companies from around the world are here”, he says. “OPEC+ observes this, and in this aspect it is a demonstration of the importance that Brazil has assumed in the global context.”

He remembers, however, that determining production cuts and setting quotas for its members can be obstacles for Brazil.

“The idea of ​​limiting Brazil’s production is something unimaginable, which would have repercussions on stock markets and confidence in the country”, he states. “We need to see what Brazil’s role would be, what its terms of accession would be like. If it would just be an observer, but how much could it observe?”

Economic directions

One of the arguments in favor of Brazil’s membership is the possibility of closely following meetings that decide the direction of the market. A source at Petrobras said that anticipating these movements would be strategic.

David Zilberstein, professor at the Energy Institute at PUC-Rio, who was director general of the ANP (National Petroleum Agency), says there is no reason for a country with an open economy to join OPEC+.

“I see no use for Brazil to submit to the discipline of a cartel. It would have no advantage and would not be a relevant member”, he states.

Zilberstein also remembers that Brazil has an economic and political dynamic that is very different from that adopted by members of both OPEC and OPEC+.

On the eve of COP28, the strength of the fossil fuel industry in Brazil was also demonstrated in Congress. The text that deals with the regulatory framework for offshore wind farms, approved in the Chamber on Tuesday (29), was disfigured, including the obligation to contract coal-fired thermal plants, an extremely polluting energy source.

Araujo criticizes the environmental liability created by contracting coal-fired thermal plants and criticizes the fact that the bill for these contracts falls on consumers across the country.

“Remembering that both RS [Rio Grande do Sul] as SC [Santa Catarina] were the states most affected by severe floods that caused billions in losses. And this will not stop”, says the expert. The South has a concentration of thermoelectric plants that will have extended operations.

According to the approved text, the operation of the thermal plants will be extended from 2029 to 2050, and the energy will be contracted by EMBPar (Empresa Brasileira de Participações em Energia Nuclear e Binacional).

_{With Reuters and AFP.}