Brazil not expected to cap oil output as part of OPEC+, sources say

By Lisandra Paraguassu, Marta Nogueira and Rodrigo Viga Gaier

BRASILIA/RIO DE JANEIRO (Reuters) -Brazil hopes to join the OPEC+ group of oil-producing countries in January after a full technical analysis, the country’s energy minister said on Thursday, however sources said Brazil is not expected to take part in the group’s coordinated output caps.

President Luiz Inacio Lula da Silva’s office confirmed receiving the invite during his trip to Saudi Arabia, but said he had not formally responded.

The president’s office and the Mines and Energy Ministry did not say whether Brazil would participate as an OPEC+ observer or as a full participant in the group’s shared production quotas.

Brazil is not expected to take part in any OPEC+ output caps, said three people familiar with the matter, who requested anonymity to discuss the confidential discussions.

OPEC+ nations on Thursday agreed to voluntary output cuts approaching 2 million barrels per day (bpd) for early next year.

Mines and Energy Minister Alexandre Silveira told his OPEC+ peers that Brazil was eager to formally enter the group at a future meeting in Vienna, after a technical review of its charter for cooperation.

“It’s all set. But there is a phase of detailed analysis by our technical team of the document we just received, which is part of the protocol in Brazil,” Silveira said in Portuguese during a virtual meeting, where his comments were met with a standing ovation from OPEC+ ministers.

In a written statement, OPEC+ said it welcomed Silveira to the meeting, adding that Brazil “will join the OPEC+ Charter of Cooperation starting January 2024.”

Brazil is the largest oil producer in South America, at 4.6 million barrels per day of oil and gas, of which 3.7 million bpd are crude.

State-controlled company Petrobras dominates crude production with 2.35 million per day, mostly processed in Brazil’s refineries, followed by Shell (LON:) with 411,000 bpd, TotalEnergies (EPA:) with 146,000 bpd, Petrogal with 110,000 bpd and CNOOC (NYSE:) with 74,000 bpd.