Oil and natural gas in Brazil: ABPIP's vision

Production of independent companies grows

2021 was a year of transition for the Oil & Gas sector. Brazilian Association of Independent Oil and Gas Producers (ABPIP), was remarkable. Due to the incorporation of the environment offshore, we have consolidated our position as the representative of independent companies.

There was an increase in associates, with broad coverage and diversified profiles of the oil and natural gas production chain in production environments and in the multiple links in this chain. We currently have 33 associates, of which 17 are operating companies performing onshore and offshore exploration activities, with strong performance in the revitalization of mature fields. We produce around 120,000 boe/day and we expect to reach at least double production by 2022, with the increase in the assets we already operate and the incorporation of new assets resulting from the Petrobras divestment program.

Among the associates, in 2021 we were also fortunate to receive companies in the supplier category and, again, companies interested in learning about the oil and natural gas market, which reactivated our aspirant category.

This market recognition imposed a review of ABPIP's structure. Thematic committees were created, whose initiatives cover topics of great relevance to the associates: Institutional Communication Committee, Legal and Regulatory Committee, Innovation and Relationship Committee with the Academy and Common Demands Committee, a committee that has worked in conjunction with SEBRAE to create a tool to better bring suppliers and operators together to dynamize and create a win-win environment in the supply function for the operating companies. In all the committees, there are representatives of the associates, who contribute in a relevant way in the work.

Our work covers several topics and initiatives that are underway in the Oil and Natural Gas sector in Brazil. ABPIP has a relevant participation in REATE – Program for the Revitalization of Onshore Oil and Natural Gas Exploration and Production, which began in 2017. Last year, when the methodology called MESA REATE started, on an itinerant basis, we actively participated in the debates held in RN, BA, ES, AL, AM and SE. Some important deliveries were made, such as free access to technical data about the onshore fields; the reduction of royalties for small and medium companies; the production of the Good Environmental Licensing Practices booklet and the regulatory framework for Marginal Fields. However, several actions are in progress and we have been talking to the Ministry of Mines and Energy in order to improve the dissemination of deadlines and the status of referrals for each of the actions being developed by their respective managers.

Within the scope of PROMAR – Program for Revitalization and Incentive to the Production of Onshore Fields, in 2021, a public consultation was carried out, with the participation of several private agents. ABPIP made around 60 suggestions for action. There were also two workshops in Macaé, in which these suggestions were further discussed. The expectation is that, in 2022, the necessary solutions to solve the bottlenecks that the program might have will be defined and implemented.

O Natural Gas Market was a recurring theme in 2021. ABPIP is part of the Gas Forum, which brings together several associations representing different sectors of the economy that are interested in the gas market and has participated in discussions, referrals and structuring measures for the consolidation of the New Gas Market (NMG). Some of our associates are committed to supplying gas to replace Petrobras, under very favorable conditions for consumers. Recently, access to the UPGN (Natural Gas Processing Unit), in Guamaré, was an important milestone.

However, as discussed at the Potiguar Oil and Gas Forum, in November, the conditions for this access need to be improved and the guidelines for the TCC do Gas, signed by CADE and Petrobras, are effectively observed. In this sense, ABPIP, together with other entities, petitioned CADE requesting these measures. We have also followed the process of PL 371/21 in the Legislative Assembly of Rio Grande do Norte, which will be a review of the current legislation and will regulate the free market in that State. For 2022, we have expectations that the NMG will continue advancing and that the conducts agreed with CADE will be complied with.

ABPIP, since its creation, fights and leads initiatives aiming to create opportunities for investment and increase the portfolio of independent companies in Brazil. In 2021, several centers were sold and the assignments were carried out. The processes at the onshore Carmópolis, Potiguar, Urucu and Bahia complexes are underway and in the final phase, which are very relevant. We expect the winners to be announced soon and the assignments to take place throughout 2022. We have been working to ensure that these processes have their schedules published so that the various agents in the oil and gas production chain can make their respective plans.

We have also worked to resolve issues related to activities in unconventional reservoirs. In this sense, in 2021, the Investment Partnership Program (PPI) and the MME worked within the scope of a public notice for companies to be able to carry out the “transparent well” in their concessions, a pilot project to evaluate and propose control measures for activities in unconventional reservoirs. In 2022, we expect the project to be carried out and that we will soon have the possibility of exploring this new opportunity in our segment in the country.

We will continue paying attention to the Congress agenda and position ourselves in terms related to the sector, as we did in the issue of PLS 1472/21, which proposes the creation of a Petroleum export tax that is being processed in Congress. In our view, this is a setback and, this year, we will prepare an agenda for our sector to be forwarded to the presidential candidates, in order to contribute to the formulation of their respective government programs.

With last year's COP26, discussions about the energy transition intensified. At ABPIP, we are concluding studies on the subject. We believe that we must manage carbon emissions to avoid the undesirable effects on climate change. However, studies indicate that the main sources of the so-called greenhouse gases in Brazil are related to the activities of the agribusiness sector. It should be noted that Brazil has a privileged position in terms of its energy matrix, which serves as a model for the rest of the world, and emissions from E&P activities are of low intensity. The largest source of emissions in the sector is in the use of derivatives, in mobility and transport. Oil is used in several other sectors linked to daily life and human activities and natural gas is considered the energy of transition and, eventually, will have relevance even in a post transition scenario.

We believe that Brazil still has enormous opportunities to be captured by improving mature fields production, increasing the recovery factor in reservoirs (it is very low when compared to the rest of the world), and increasing the low rates of exploration activities. The benefits also include job generation from the oil and gas activity. For all these reasons, we will demand efforts to reduce our emissions, use the carbon market when necessary, until reaching the Net Zero in our operations, which we will maintain in order to continue investing, generating social welfare and producing oil and natural gas.

I thank my colleagues on the board, associates and the ABPIP team for their support and efforts so that we could have made these deliveries. We've done a lot, but we still have a lot to do.

Luciana Borges is currently General Manager of Maha Energy Inc. She has over 20 years of experience in the energy industry.and oil and gas, of which in the last 14 years she held leadership positions in multinational companies of different cultures. In April 2021, she assumed the presidency of the Brazilian Association of Independent Oil and Gas Producers (ABPIP) with the mission of intensifying discussions on the regulatory agenda and sector transitions, in addition to continuing the internal restructuring of the Association.