Brazilian Minister of Mines and Energy assures that country “will not commit to cutting production”
12/01/2023
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Alexandre Silveira and Prince Abdulaziz bin Salman — Foto: Ricardo Stuckert/PR
The minister of Mines and Energy, Alexandre Silveira, said Thursday that Brazil “will not make any commitment to reduce production,” following the news that the country has been invited to join OPEC+, the expanded group of the Organization of Petroleum Exporting Countries. The invitation came Wednesday during President Lula’s visit to Riyadh, the capital of Saudi Arabia. It was formalized in a letter that Mr. Silveira received Thursday. But the idea, according to sources, is being resisted within the government.
On Thursday, after arriving in Dubai with President Lula, Minister Silveira took part in a conference call with the Arabs in which he discussed the matter and signaled that the accession was almost certain. Speaking to reporters, however, he took a more cautious tone.
“In my conversation with them [OPEC], I made it very clear that there is a way to go, which is to analyze the terms of OPEC+. And in OPEC+, it is clear that members are not committed to cutting production, but are participating in a discussion platform,” he said. “We’re going to analyze it, because Brazil is not going to make a commitment to cut production.” Mr. Silveira also said that joining the organization is “a government decision” that does not go through Congress.
Earlier, in the conference call with OPEC members, Mr. Silveira said that “President Lula confirmed our OPEC+ cooperation letter of January 2024.” The ministry’s press office said the minister was referring to the receipt of the letter of invitation, not Brazil’s acceptance.
Asked about the production cut announced Thursday by OPEC+ (the extension of the 1 million barrels per day cut announced in June), he defended that Brazil “has more competitive prices” and said that the value negotiated in Brazil today “is completely out of line with the international market.”
“The policy that I have defended is that Brazil should have increasingly competitive prices in order to be able to stimulate the national economy, to be able to continue to stimulate a reduction in interest rates and, consequently, employment and the generation of jobs and income. Everyone knows that fuel prices affect people’s lives,” he said.
Asked about the impact of a possible increase in oil prices in Brazil, he said domestic prices would not necessarily rise. “Brazil has an oil production that we even know is in surplus. The price of fuel in Brazil, which was the policy of lowering prices, is completely disconnected from the international price,” he said.
Members of President Lula’s entourage in Dubai told Valor that Brazil’s entry into OPEC+ is not a fait accompli and that there is still resistance within the government. They did not specify the source of this opposition. But one official said there are multiple views within the government about joining the entity. President Lula and aides such as Foreign Minister Mauro Vieira and special presidential advisor Celso Amorim are still trying to understand what Brazil’s entry into OPEC+ would mean.
On the one hand, there is a group of President Lula’s advisors who believe that the country should not join OPEC+ at a time when Brazil is trying to lead a global alliance to decarbonize the economy. Mr. Lula is in the capital of the United Arab Emirates to attend COP 28, the global conference on climate change. And the news of a possible accession to OPEC+ has sparked criticism about the possible contradiction between joining an oil lobby and leading discussions to prevent global warming from exceeding 1.5 degrees Celsius above pre-industrial levels.
At the other end, there are those who argue that it would be positive for Brazil to join an entity like OPEC+ precisely to put pressure on the oil countries to speed up the energy transition. In addition, this group believes that Brazil, as an oil-producing country, should be present in the main forums for discussing the issue. This position was expressed by the minister of Mines and Energy, Alexandre Silveira.
OPEC+ was created in 2016 to include members who act as “observers,” discussing issues related to the market, but are not obliged to follow the cartel’s policies. Together, they act to increase or decrease production in order to influence commodity prices in the global market. OPEC+ members are Russia, Mexico, Kazakhstan, Oman, Azerbaijan, Malaysia, Bahrain, South Sudan, Brunei, and Sudan.
According to the U.S. Department of Energy, these 10 countries account for 16.5 million barrels of oil per day. The 13 OPEC countries produce a total of 28.7 million barrels per day, led by Saudi Arabia (10.4 million barrels). Brazil has a daily production of about 3.67 million barrels of oil per day, according to the National Agency of Petroleum and Biofuels (ANP).
*Por Fabio Murakawa, Murillo Camarotto — Dubai and Brasília
Source: Valor International