Brazil pumps oil record in May: Correction

Market: Crude oil, Natural gas
02/07/19

Corrects date of previous record to December 2016.

Oil production in Brazil averaged 2.73mn b/d in May, surpassing a December 2016 production record with the help of new well connections at the Buzios and Lula pre-salt fields, according to data from the hydrocarbons regulator (ANP).

Brazilian oil production has hovered around 2.6mn b/d for 28 months, during which state-controlled Petrobras installed eight production platforms and carried out multiple maintenance campaigns.

The company, which accounted for around 75pc of Brazil's total oil production in May, has said that output will increase significantly in the second half of the year with the new well connections.

For 2019, Petrobras is targeting a 13pc increase over the 2.01mn b/d produced in Brazil in 2018.

The company produced 1.92mn b/d in the first five months of 2019, a 2.5pc decrease compared with the same period of 2019, according to ANP data. The drop is partially related to the third quarter 2018 sale of a 25pc stake in the Roncador field to Norway's Equinor. Petrobras plans to shed more upstream assets this year.

Petrobras has stopped reporting monthly production in favor of quarterly data, but the firm's output appears to have increased significantly in June based on new export figures. Last week Petrobras said its crude exports in the first half of 2019 averaged around 600,000 b/d, an almost 30pc increase over the first six months of 2018, according to the company's quarterly results. In the same period, Petrobras' refinery utilization was flat at around 76pc of the company's 2.2mn b/d of installed domestic capacity.

The Petrobras-operated Lula field remained Brazil's biggest producer in May with crude flows of around 910,000 b/d, up from 873,000 b/d in April. The field located in the BM-S-11 block of the Santos basin now accounts for a third of oil produced in all of Brazil. Pre-salt production accounts for almost 61pc of total production in Brazil, a number that is expected to grow as upstream investment shifts away from the country's aging post-salt fields in favor of big pre-salt reservoirs.

Petrobras holds a 65pc operating stake in BM-S-11. Shell holds a 25pc stake and Portugal's Galp the remaining 10pc.

Post-salt oil and gas production recorded a modest increase in May, rising to 1.15mn b/d of oil equivalent (boe/d) from 1.1mn boe/d in April.

Natural gas production averaged 118mn m³/d (4.2bn cf/d) in May, a 4.4pc increase over April and a 5.4pc year-on-year increase.

Brazil's total average production in May including gas was 3.473mn boe/d, a 4.8pc increase compared with April and up almost 5pc on the year.

Shell was the second largest producer behind Petrobras with a net 426,783 boe/d, up from 413,121 boe/d in April.

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