Should Brazil accept joining OPEC+, the global oil cartel?

Brazil was invited to join the Organization of Petroleum and Allied Exporting Countries (OPEC+). The group is a kind of “extended version” of OPEC, the oil exporters’ cartel. The government is evaluating the response.

But, for experts, it makes no sense for the country to become an ally, since its production is growing and the organization aims to precisely control and limit exported volumes, in addition to bringing insecurity to investors in Brazilian oil.

José Mauro Coelho, president of consultancy Aurum Energia and former president of Petrobras, states that he does not see any sense in the possibility of Brazil joining OPEC+ for three reasons: the country would be subject to export permission quotas; the country needs to monetize its reserves and not limit its exports; and there would be no way for the government to control the exports of private companies.

“The expectation is that in about 10 years, in 2032, Brazil will be among the five largest producers and exporters of oil per day. With this and the energy transition, it is important that Brazil quickly monetizes its oil reserves. It doesn’t seem to make much sense to me to join OPEC+, an organization led by Saudi Arabia, which controls the supply of oil in the world”, argues Coelho.

The expert explains that control is achieved through the quota system, in which it is determined how much each member country can export, controlling the supply of oil on the market, which affects prices.

“For me, it makes no sense for Brazil, which could heavily monetize its production, to be subject to a certain export quota. Normally, a country that joins OPEC wants to gain something from the sale of its oil on the international market or access to technology. Brazil doesn’t need either of them”, points out Coelho.

For Marcio Felix, president of the Brazilian Association of Independent Oil and Gas Producers and its associates (ABPIP), inclusion in Brazil would not “necessarily” limit him, as he could only enter as an observer.

In his assessment, Brazil in OPEC+ recognizes its position as a major oil producer and exporter. On the other hand, he warns that being associated with the group could harm the attraction of investments and the market value of companies operating in Brazil, especially Petrobras.

“Being in OPEC+ can send a message to the world about the power of sustainable energy diversity”, he says, adding:

“Brazil must maintain a good relationship with everyone, including OPEC, but our profile as a growing oil exporter poses challenges to a possible discussion of quotas.”

At the meeting on sustainable energy, fossil fuels are on the rise

Brazil’s proposal to join OPEC is not new, but the contradiction in the context in which this occurs has caused controversy. After the choice of Dubai, in the United Arab Emirates, one of the main oil producers and exporters in the world, to host the Climate Summit (COP 28), the theme “green energy” lost space to fossil fuel. And invitations like this corroborate the feeling of distortion of the event’s objective.

Another contradiction is that President Luiz Inácio Lula da Silva defends the energy transition and reduction of fossil fuel production, but the president of Petrobras, Jean Paul Prates, says that Brazil must accept the OPEC+ invitation, even without entering into quotas, that is, just observing.

The Minister of Mines and Energy, Alexandre Silveira, evaluates the proposal and the final decision is made by President Lula, who has not yet commented on the matter.