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Brazil shows Nigeria how to lure investors in 2021 with systematic oil reforms

Five things to know about Levene Hydrocarbons

Nigerian government has lessons to learn from Brazil who is carrying out more systematic oil reforms in order to satisfy its obsession to become the world’s top destinations for investments in 2021, amid heated global competition and uncertainties about the coronavirus pandemic.

With an estimated oil reserve of 36 billion barrels, Nigeria boasts of one of the most fertile hydrocarbon provinces in the world. However, investments into the sector have been static. For Brazil, the situation is different, the country’s oil reserves of 12.84 billion barrels is a delight to investors and look set to attract even more in 2021.

Brazil is also in the process of hammering out a new regulatory framework for the natural gas industry, as state-owned Petrobras seeks to exit the business, with Congress expected to pass the measure in 2021.

Brazil’s Congress is also expected to debate potential changes to the production sharing regime during the next session, which would allow the National Policy Energy Council, to determine whether exploration and production blocks would be sold under the production sharing or concession models.

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“Regulatory stability is important, continuous improvement in the regulatory process is important,” Brazil’s energy minister Bento Albuquerque said during a webinar. “But what’s most important is not to miss the opportunity to do the right thing.”

Brazil’s state-owned Petrobras is seeking to end gas and refineries monopolies; to achieve this the corporation is to sell eight of its refineries and has already completed negotiations to sell Refinaria Landulpho Alves in Bahia state to Abu Dhabi‘s Mubadala Investment Co.

Petrobras plans to complete the sales by the end of 2021, but company officials have said that the coronavirus pandemic will likely push the conclusion of some deals into the first half of 2022.

“If these transactions are concluded, Brazil’s refining landscape will be completely re-shaped, moving from a monopoly controlled by Petrobras to an open market with potentially multiple new participants,” S&P Global Platts

Analytics said in a report.

Petrobras is also shedding more than 100 legacy onshore and offshore fields, creating a dynamic market for small- and medium-sized players focused on revitalizing mature areas.

The integrated energy Petrobras plans to add 13 Floating Production Storage and Offloading (FPSO) units between 2021 and 2025, with four of those destined for rich Búzios oilfield which will receive 36 percent of capital expenditures destined for exploration and development activities.

Brazil’s oil production has been rising for decades, from 1.2 million bpd in 2000 to 3 million bpd in 2020, according to Platts Analytics, which is currently forecasting production to rise another 1 million bpd by 2040.