Brazil Is Destined to Become One of the World's Top Five Oil Producers
To support that massive investment, Petrobras is focused on developing assets that have a low breakeven price, a strategy adopted in the wake of the pandemic-induced oil price crash. Indeed, Brazil’s national oil company claims to have an industry-low portfolio-wide breakeven price of $28 per barrel Brent, even less than super majors Exxon and Chevron. That, coupled with growing demand, especially from China, for Brazil’s light sweet pre-salt crude oil and its low carbon intensity to extract, will ensure Petrobras’ operations remain profitable even in low price environments.
It is not only Petrobras that is investing heavily in Brazil’s oil patch. Latin America’s largest economy and oil producer is attracting considerable attention from foreign investors, notably Big Oil. Indeed, Big Oil’s deep pockets will ensure spending on Brazil’s booming offshore oil industry continues expanding at a solid pace. It is global supermajor Shell, which over the last decade has emerged as a major player in offshore Brazil. The South American country now accounts for around 15% of Shell’s production, and the supermajor is Brazil’s second-largest petroleum producer, responsible for nearly 11% of crude oil output.
During late May 2025, Shell announced first oil from the Mero-4 project in the Mero oilfield situated in the pre-salt area of the Santos Basin. This occurred after the FPSO Alexandre de Gusmão was connected to the project's 12 wells, with the operation having a nameplate capacity of 180,000 barrels of oil per day. Shell holds a 19.3% working interest in the Mero field, which is operated by Petrobras with a 38.6% working interest. The remaining 42.1% is held by several energy companies, including Big Oil companies with French supermajor TotalEnergies holding 19.3% and Chinese state-controlled CNPC and CNOOC with 9.65% each.
Earlier this year, in March 2025, Shell disclosed that it had made a final decision to invest in the Gato do Mato project. This is a pre-salt discovery situated in Brazil’s prolific Santos Basin. Shell, which holds a 50% working interest, is the operator while partners Colombian national oil company Ecopetrol and France’s TotalEnergies control 30% and 20%, respectively. The project is targeting a resource estimated to contain 370 million recoverable barrels of crude oil. The Gato do Mato oilfield is expected to commence operation in 2029 with a 120,000-barrel-per-day FPSO supporting production.
French supermajor TotalEnergies holds 11 of Brazil’s oil-producing licenses, four of which are operated. The company is Brazil’s third-largest oil producer, accounting for nearly 4% of the South American country’s petroleum output. TotalEnergies continues to invest in offshore Brazil, targeting pre-salt oil discoveries for development. As previously discussed, the supermajor’s latest projects are the Mero-4 field and the Gato do Mato development. TotalEnergies anticipates boosting oil production in Brazil to 200,000 barrels per day by the end of 2026.
Norway’s state-controlled global supermajor Equinor also operates in Brazil. The company considers South America’s largest petroleum producer to be a leading source of production growth. Back in June 2025, Equinor announced winning the S-M-1617 block situated in the Santo Basin during Brazil's 5th Open Permanent Concession bid round. Equinor is also progressing interests in a range of oil and gas projects, which, on completion, will further boost Brazil’s overall hydrocarbon output.
According to the ANP, Brazil’s oil patch will attract a whopping $122 billion of investment by 2029, most of which is destined for prolific offshore ultra-deep-water pre-salt oilfields. While Petrobras will contribute a significant amount of that capital a large portion will come from foreign energy companies, notably Big Oil. It is easy to understand Big Oil’s attraction to Brazil and the offshore pre-salt reservoirs. Average breakeven costs for projects are estimated to be less than $40 per barrel brent, falling to $30 per barrel or less for pre-salt assets. On top of which oil lifted from Brazil’s offshore fields has a low carbon intensity of around 15 kilograms of CO? per barrel a significantly lower amount than the estimated global average of 20 kilograms of CO? per barrel.
By Matthew Smith for Oilprice.com
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