Drop in International Oil Prices Helps Brazil’s Trade Balance

By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – The recent decline of international petroleum prices to a range between US$50-60 per barrel may bring benefits to the Brazilian trade balance, says Central Bank President Alexandre Tombini. Speaking on Wednesday, December 17th at a breakfast event with journalists in Brasilia, Tombini said from the trade balance and inflation point of view, the lower oil price to countries like Brazil is favorable.

“We are net importers of petroleum. If the barrel continues at around US$55 to US$60 per barrel we would see a savings in out trade balance of anywhere from US$5-10 billion,” added Tombini. According to the Central Bank president five months ago, when the barrel of Brent was priced at US$110 no one was forecasting a steep decline in the price of the commodity. “It is difficult to say if these (current) prices will be sustained.”

Although Tombini said that due to the lower prices petroleum companies around the world are likely to revise their investments plans for the next few years, the head of Brazil’s energy regulator ANP (National Petroleum, Natural Gas and Biofuel Agency), Magda Chambriard, guaranteed that petroleum production projects in the country, especially sub-salt layer projects, are ‘robust’ and will continue.

“We have projects which are very robust[…] with large gains in scale,” said Chambriard at an agency ceremony in late November. According to the executive the pre-salt layer area is very large and capable of attracting investors from all over the world.

The latest ANP data, of October 2014, shows that the country produced a record 2.393 million barrels of oil per day during the month, surpassing the 2.358 million barrels per day registered in September.

Reports forecast that by 2035 Brazil will account for almost sixty percent of all deep-water production in the world. Today, close to 92.4 percent of all oil production and a little over 73 percent of all natural gas extracted in Brazil comes from offshore oil fields.