One of the world’s leading energy consultants, he says it is good to the country to be open to the world
Daniel Yergin — Foto: Divulgação
Brazil can benefit from a long-term energy outlook that can guarantee revenue even in times of crisis. Achieving this goal depends, however, on having predictable and reliable regulations and policies in order to attract investment.
The view comes from Daniel Yergin, one of the world’s leading energy consultants. Vice-chairman of S&P Global’s board, Mr. Yergin says that, regardless of the outcome of the presidential elections, it is positive for Brazil “to be open to the world.”
Mr. Yergin has published three books – “The Prize” won a Pulitzer Prize in 1992. The most recent, “The New Map”, was released in late 2020 and has not yet been translated into Portuguese. In the book, Mr. Yergin identified that Ukraine could be the issue that would lead to tensions between the West and Russia. On Monday, Mr. Yergin participates, virtually, in Rio Oil and Gas, the largest event of the sector in Latin America.
He said that Brazil needs to pay attention to another issue that he also highlights in “The New Map”: the increased power competition between the United States and China. According to him, the energy market has become more divided and risky after Russia’s invasion of Ukraine and sanctions against Russian energy. “The world will still need oil for a while.”
See below the main excerpts of Mr. Yergin’s interview to Valor.
Valor: What are your conclusions about the current energy crisis?
Daniel Yergin: The global energy crisis started a year ago when markets became tight quickly, and now this crisis has joined a global geopolitical crisis. But it is important to note that there was already a global energy crisis before Russia invaded Ukraine. Prices today are high and what was a globalized market has now become a divided market with more risks. Europe, which was the largest market for Russia’s energy exports, is determined to close the door. Another change is how LNG (liquefied natural gas) has come to be seen as a major strategic asset.
Valor: How does this scenario impact Brazil’s position in the market?
Mr. Yergin: Brazil is an important oil producer, with a location that contributes to global diversification and can benefit from the continuing global demand for oil. But it is important to remember that there will be global competition for attracting investment. Being competitive and reliable will benefit Brazil in the years to come. The world will still need oil for some time to come.
Valor: What does Brazil need to discuss in the energy sector at this time of presidential elections?
Mr. Yergin: I hesitate to give advice in the midst of presidential elections. But I would say that ensuring that Brazil is seen as a predictable and reliable country in terms of regulation and policies will continue to attract investment to the country and keep it competitive. Being “open” to the world is positive. Whoever the president is, Brazil will benefit from establishing itself as a country that looks to the future and thus secures revenues to meet needs even during the inevitable oil market crises.
Valor: What Russia’s role in the energy market will be?
Mr. Yergin: Russia is an energy superpower, but it is wasting political capital and, having lost its most important market, may cease to be one. The country is lacking access to Western technology and investment. And it will still be a superproducer, but production is expected to start to decline. Let’s see what the disruption in the oil market will look like in early December, when sanctions against Russian crude oil go into effect. Where will that oil go? And at what price?
Valor: What has the increased focus on energy security meant for the oil market since the war in Ukraine began?
Mr. Yergin: People had forgotten about energy security. In Europe, it means paying more attention to oil and gas and also to coal. Hydrocarbons supply 82% of global energy.
Valor: What about the effect on renewable energy?
Mr. Yergin: Governments are looking to ensure reliable supply. Renewables will grow fast, which will be a contribution to energy security, but they are also intermittent sources, and reliability is an important requirement. The growth of renewables and electric cars raises new questions about the scale of the minerals that will be needed to serve these markets.
Valor: How important is hydrogen as an energy source?
Mr. Yergin: Hydrogen was barely an industry topic three or four years ago. Now it is being talked about everywhere, both with the aim of using it as a gas in power generation and for heating. Companies are working on it. The European Union says it can have 25% of its energy consumption met by hydrogen by 2050. But it will take three to four years before the dimensions that hydrogen can take as an energy source become clearer. Scale ability still needs to be demonstrated.
Valor: Can hydrogen replace oil and gas in the future?
Mr. Yergin: I think it is less likely that hydrogen will replace oil in the transportation sector. Development funds are focused on electric vehicles. If all plans and scenarios come to fruition, hydrogen could become a major gas for energy purposes. But there is also the possibility of producing hydrogen via natural gas.
*By Gabriela Ruddy — Rio de Janeiro
Source: Valor International