Brazil to Join OPEC Without Participating in Oil Production Caps

Brazil is on the pathway to become a member of OPEC+, a significant alliance in the oil industry, as of January. However, the chief executive officer of Petrobras, the Brazilian state-owned oil giant, confirmed that the country will not be adhering to the organization's oil output restrictions.

Petrobras CEO's Stance on Production Quotas

During a recent revelation, Jean Paul Prates, CEO of Petrobras, emphasized the company's stance regarding production limitations. "We would never be part of an organization that imposes production quotas to Brazil," he stated in an interview with Reuters. He insisted that as a company traded on the New York Stock Exchange, Petrobras could not be bound by production quotas.

This announcement surfaced amid speculation about Brazil's commitment to OPEC's collective decision to scale back oil production by 2 million barrels per day beginning next year. Prates underscored Brazil's intention to join as a member without voting rights and without agreeing to a production cap, similar to some current members of the OPEC+ group.

Brazil's Formal OPEC Inclusion and Energy Transition

Prates foresees the formal inclusion of Brazil in OPEC happening around June, with the country initially participating in meetings as an observer. He mentioned this step as crucial for advancing the energy transition goals championed by both OPEC and Brazil.

Petrobras's Asset Sales and Competition Regulation

Concurrently, Petrobras is seeking to revisit some conditions set forth by Brazil's competition regulator, Cade. Earlier commitments required Petrobras to divest from a number of oil refining and gas assets. These included selling oil refineries outside the Rio de Janeiro and Sao Paulo regions, plus the company's natural gas transportation and distribution assets, within a scheduled timeline set back in 2019.

Petrobras in the Spotlight

The news of Petrobras' strategic positioning within the global oil market has brought attention to its potential upsides, its continuous dividend payouts, and overall undervaluation as perceived by some market analysts. As a robust dividend play, the company continues to be an attractive option for investors looking at the energy sector.

Brazil, Petrobras, OPEC