The world economic crisis has been showing its effects on the oil market. Major international analysts have revised their demand expectations downwards and, aside from the slight recovery in recent days, the price has retreated by around US$ 100 per barrel since its peak in July last year. In fact, the world demand for oil had already been falling even before the worsening of the financial crisis, in September, as a result of the rise in the price of a barrel.
But the effects of the crisis are evident. The sudden drop in prices, regardless of the factors that motivated it, was added to the projections of an even greater retraction in demand, resulting in a reversal of expectations and a change in behavior on the part of almost all the main oil companies in the world, private or state-owned. The difficulties in generating cash and the reduction in the supply of credit, especially for smaller companies, further aggravate the situation and suggest more conservative strategies.
The result was a good crop of announcements of reduction of investments and postponement of projects in the activities of exploration and production of oil and gas in several parts of the world. Due to the slowing demand, the high costs inherited from the cycle of high prices and the difficulty in finding financing for projects, companies' investments are falling.
In the opposite direction, the Brazilian oil sector has shown signs that it will accelerate its pace, motivated, especially, by the high potential of the pre-salt prospects. After Petrobras announced a significant increase in investments planned for the next five years, large international companies operating in Brazil also announced their intention to accelerate their investment pace in the country, clearly distancing themselves from their strategies in other parts of the world. The case of the British BG, the American Hess and the Spanish Repsol.
Total investments in oil and gas in Brazil are expected to reach USD 195 billion by 2013, of which about 60% will go to projects in the exploration and production segment. And the expected increase in production will allow Brazil to export significant volumes of oil and oil products, with significant impacts on the trade balance and on the country's growth.
In the current conjuncture, the oil sector plays an important role in the Brazilian economy due to the counter-cyclical effect that its significant investments and demand for goods and services may have. In addition, future production will allow for a substantial increase in government participation (royalties and special participation), with positive effects on public accounts and on the State's investment capacity.
João Carlos de Luca is an engineer, ex-Petrobras, where he served as superintendent of the Campos Basin, E&P director, member of the Board of Directors and subsidiaries and consultant to the executive vice-presidency of Braspetro. He was president of YPF and is currently president of Repsol YPF Brasil. He also assumes the presidency of the IBP, the vice presidency of the Business Cooperation Committee of FGV, the vice presidency and coordination of the Oil and Gas Committee of ABDIB, in addition to participating in the World Petroleum Council as secretary of the Brazilian National Committee.