Big Oil seeks refuge in Brazil from Latam regional turmoil

Big Oil seeks refuge in Brazil from Latam regional turmoil
# 29 October 2019 05:27 (UTC +04:00)

When executives arrive in Rio de Janeiro this week for Brazil’s biennial Offshore Technology Conference, they will find themselves in Latin America’s most promising market for Big Oil by far, APA reports citing Reuters.

That marks a dramatic change from only a year ago.

In early October 2018, Brazil’s current president, Jair Bolsonaro, was in a tight electoral race with Fernando Haddad of the leftist Workers’ Party. Global executives feared a Haddad victory would reverse recent pushes to provide them an opening in Brazil’s oil industry, which for years had been dominated by state-run Petroleo Brasileiro SA, or Petrobras.

Elsewhere in the region, Brazil at the time had fierce competition in the race to attract capital.

Business-friendly governments in Argentina and Ecuador were auctioning exploration blocks and working to lure foreign oil companies.

In Mexico, leftist President Andres Manuel Lopez Obrador had not yet taken office, and investors were still benefiting from free-market reforms that had opened up access to prized oilfields in the Gulf of Mexico.

In the last year, many of those competitors have effectively taken themselves out of the game.

Lopez Obrador, widely known as AMLO, halted a liberalization of Mexico’s energy market. Protests and economic crises have undercut Argentina and Ecuador’s would-be reformers.

By contrast, Bolsonaro has made dramatic strides toward expanding global energy firms’ role in Brazil — with over a dozen bidders in back-to-back oil auctions next week expected to fetch around $28 billion in signing bonuses.

Some companies have said the terms look expensive.