Brazil in OPEC+: country should join the group, but without quotas, says president of Petrobras

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Brazil’s possible entry into OPEC+, which brings together the main oil producers and allies, such as Russia, was announced on Thursday (30). Jean Paul Prates, president of Petrobras, in an interview with Estúdio i. Reproduction/GloboNews Brazil should join the group of oil producers OPEC+ with a role of cooperation and observation of decisions, but without participating in the production quota system, Petrobras’ executive president, Jean Paul Prates, told Reuters. “They call other countries that do not have the right to vote, and quotas are not imposed on these countries. We would never participate in an entity that established a quota for Brazil, especially with the support of Petrobras, which is an open company on the market and does not may have a quota”, stated the executive. Brazil’s possible entry into OPEC+, which brings together the main oil producers and allies, such as Russia, was announced on Thursday (30) at a group meeting with the participation of the Minister of Mines and Energy, Alexandre Silveira. Silveira said at the meeting that President Luiz Inácio Lula da Silva “confirmed our letter of cooperation” with the group of oil-producing countries from January 2024, and that a government technical team is analyzing the invitation received. According to the president of Petrobras, Brazil will analyze the platform’s operating rules to make a decision in June next year. “In June, there will be another meeting where, certainly, in Vienna, Brazil will take it and say ‘look, I’m willing to participate, I’m in’. And then start participating in the meetings as a kind of observing member.” The day before, sources had already told Reuters that Brazil should not participate in the OPEC+ production quota system, which could lead to cuts in oil supplies. One of the main resistances for Brazil to participate in the quotas is Petrobras, which seeks to increase its extraction in the country, to expand the supply of derivatives on the domestic market. Furthermore, the company obtains important revenues from oil exports. Brazil is the largest oil producer in South America, with a production of 4.66 million barrels of oil equivalent per day (oil and gas) in September. What are OPEC+ quotas OPEC+, which is responsible for more than half of oil production in the world, was created with the aim of coordinating and unifying the production and export policies of the commodity by member countries, always aiming to “safeguard their interests, individually and collectively”, according to the organization’s statute. Therefore, what OPEC+ does, in practice, is determine how much oil will be produced to control prices on the global market. With greater production, the price tends to become cheaper. With less production, the price may become more expensive or stabilize. When there is low demand for oil in the world, for example, the tendency is for production to be reduced, so that there is not much stock of the product (which would devalue its price). Decisions about how much will be produced are determined by quotas – which is what the president of Petrobras said Brazil will not have. Member countries, based on global fluctuations in demand and price, receive quotas on the maximum quantity they can produce per day.

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