Petrobras, Brazil’s state-controlled oil company, is set to become an observer in OPEC+ starting January 2024, enabling the country to engage in group discussions without being bound by production quotas, as clarified by Jean Paul Prates, its Chief Executive Officer (CEO).
Prates emphasized Petrobras’ desire to collaborate on energy transition initiatives, leading to the decision to join OPEC+ as an observer. The observer status exempts Brazil from production quotas, an essential consideration for Petrobras due to its commitment to remain publicly traded, incompatible with adhering to production restrictions.
“We would never join an organization that imposes production quotas on Brazil,” stated Prates.
Brazil aims to leverage the observer status in OPEC+ to actively engage in discussions, share expertise, and gain insights from influential members within the group, rather than pursuing full membership.
OPEC and the OPEC+ alliance are actively seeking additional members to strengthen their market influence and coordinated oil policies. Despite earlier reports indicating OPEC’s interest in Guyana, the South American country has no intentions of joining the oil cartel.
Brazil’s previous hesitance to join OPEC was mainly due to concerns regarding consistent production cuts. However, the impending observer status indicates a shift in Brazil’s approach towards collaboration with OPEC+ without compromising its production capacities.
This decision arises amidst scrutiny faced by OPEC for its recent production cuts, attracting criticism from some Western nations amidst the energy market’s post-pandemic recovery. The International Energy Agency (IEA) cautioned OPEC about the potential adverse impacts of higher crude prices on the global economy.
Currently, OPEC consists of 13 members, including Algeria, Angola, Congo, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Saudi Arabia, United Arab Emirates, and Venezuela.