| RIO DE JANEIRO/SAO PAULO, March 31
RIO DE JANEIRO/SAO PAULO, March 31 Brazil is
poised to sharply increase oil exports this year as heavy
investments spur new output and demand for its lighter crudes
win more buyers, especially in China and India.
Production is projected to rise 210,000 barrels per day
(bpd) in 2017, second only in the size of additional supply to
the United States among non-OPEC producers. Higher output from
the U.S. and Brazil are among the factors impeding an OPEC-led
effort to lift crude prices through production cuts.
Growth in exports should continue in future years as
companies such as Royal Dutch Shell Plc prepare to tap
some of the largest discoveries made since the end of the last
decade off the nation's Atlantic coast.
Already just in the first two months of the year, Brazil's
oil exports have soared 65 percent over the same period a year
earlier to record highs of more than 1.46 million bpd, according
to government data obtained by Reuters.
Consultancy Wood Mackenzie estimates 2017 exports will hit
nearly 1 million bpd, up from 798,000 bpd last year.
Years of heavy investment that left state-controlled
Petróleo Brasileiro SA (Petrobras) as the world's
most indebted oil company are beginning to pay off. The nation
hopes to use higher oil sales to help drag its economy out of a
Exports are rising along with the company's output of light,
sweet crudes, Guilherme Franca, executive manager for marketing
and trading at Petrobras told Reuters.
"Our production consists of much lighter oil than we used to
produce in the past," he said in an interview.
"We have demand for more of it than we can deliver."
Light, low-sulfur crudes are easier and cheaper to refine
into gasoline and diesel, and match demands for less polluting
fuels in Asia, the United States and Europe.
Franca said exports by Petrobras alone rose to 420,000 bpd
in 2016 and should reach 450,000 bpd this year. If it meets
future targets, the company could be exporting as much as
750,000 bpd as soon as 2020, he said.
In the first two months this year, Brazil sold 10.4 million
barrels of crude to India, half as much as it shipped to the
country during 2016, Brazil's trade ministry data showed.
Sales to China in January and February totaled 40.8 million
barrels, up 125 percent from the same period in 2016 and more
than 10 times Brazil's shipments to the country five years ago.
Some of the oil shipments are linked to repayments on as
much as $15 billion in loans from China, including debt taken on
Under deals with lender China Development Bank, the oil
giant would send as much as 300,000 bpd to four Chinese firms:
China National United Oil Corporation, China Zhenhua Oil Co Ltd,
Chemchina Petrochemical Co Ltd and Unipec Asia, a subsidiary of
Sinopec Corp .
"There is strong demand currently for Brazil's medium-sweet
crude. The United States, China, Korea, India, they are all
buyers of this type of oil due to newer standards to reduce
sulfur content in fuels," said Esa Ramasamy, an analyst with S&P
Ramasamy said 65 percent of Brazil's output is medium-sweet
grades and most of the country's new production will be of the
Petrobras produced 2.14 million bpd in 2016 and targets 2.77
million bpd by 2021. The company, which is trying to reduce debt
of around $100 billion, is pouring all its efforts into the
high-yield subsalt region.
Shell, the second largest producer in Brazil after
Petrobras, is pumping around 295,000 bpd and wants to quadruple
that in three years. The company is part of a consortium that
will explore the giant Libra subsalt prospect, along with
Petrobras, France's Total SA and China's CNOOC Ltd
and China National Petroleum Corp.
March shipping data shows PetroChina moving a 130,000-tonne
tanker from Brazil to China. Commodity trader Vitol
also has two tankers carrying 260,000 tonnes of Brazilian crude,
and Shell and Repsol SA have 560,000 tonnes, also
heading to China.
Wood Mackenzie analyst Ixchel Castro said exports also have
been boosted by weaker domestic consumption from the country's
deepest recession on record. An economic recovery could siphon
some of the exports.
(Additional reporting by Luciano Costa; Editing by Gary
McWilliams and Marguerita Choy)