Brazil is a big producer of oil in South America, but the country still needs to import this product to supply the national demand. This article gives an overview of Brazilian oil importations and outlines what is required for this process.
No other energy source has the geopolitical importance of oil. A country that owns and controls oil reserves and maintains an appropriate structure of refining has competitive advantages over vital sectors of the domestic economy – such as transportation and electricity production – and industry, participation in international trade and the direct export of oil and its derivatives.
Besides generating fuels such as gasoline, dieseland jet fuel, oil is also the basis of many industrial products, that can vary from paraffin and naphtha to fabrics and plastics. Being the second largest oil producer in South America, Brazil experiences a constant growth in this sector.
History of Oil in Brazil
In the late 1970s, the country produced an average of 200 thousand barrels of oil per day. In 2009, the country reached the milestone of producing two million barrels daily. The production growth in this period was associated with the great maritime discoveries of oil and gas in the Campos Basin, which began with the discovery of the Garoupa field (RJ) in 1974, starting the search in ever deeper waters. In the years 1980 and 1990, giant fields were discovered in the basin.
In the first half of 2008, Petrobras announced the discovery of an oil field in the pre-salt in the Santos Basin. The potential of this discovery puts Brazil in the same reserve level of the major world producers. Petrobras foresees a total production in Brazil and abroad of 3.993 million barrels of equivalent oil (BOE) in 2015 and 6.418 million BOE per day in 2020.
Import Situation Nowadays
Oil imports from Brazil rose more than 140% in July of 2013, while exports dropped by half. The reason for this decrease in exports is because even though the Brazilian production of the commodity is high it is widely used domestically to keep up with the ever increasing demands.
|Month||Barrels Imported in 2012 (BOE)||Barrels Imported in 2013 (BOE)||Variation 2012 to 2013 (%)|
|January|| 9,378,488 ||10,598,413||13|
|Total for the Year||113,066,150|| 65,645,655 ||-|
Oil imports rose to 3.124 billion USD in July of 2013, compared to 1.233 billion USD in July of 2012. Exports shrank to 692.2 million USD in July of 2013, compared with 1.348 billion in July of 2012, according to data released by the Secretariat of Foreign Trade (Secex).
Higher imports and lower exports of oil have affected not only the accounts of the country – the trade deficit for the year is 5 billion USD – but also the accounts of Petrobras.
|Year|| Average Price of the Imported Barrel |
Since the beginning of 2013 until July of the same year, the importation of oil and fuel total to 25.8 billion USD, up from 21.68 billion USD in the same period in 2012, when Brazil was already importing high volumes.
Why does Brazil Import Oil with so many National Reservoirs?
The country produces more crude oil than its domestic demand – currently 1.9 million barrels per day. However, since 70% of the production is heavier crude oil and the Brazilian refining structure is not entirely suitable for processing this type of oil it is still necessary to import light oil.
The importation of light oil is fundamental to increase the production of light and medium derivatives, such as gas kitchen, gasoline, naphtha and diesel. Thus, the excess of domestic heavy oil is exported. In the last few years the Brazilian balance of trade has suffered deficits in this sector.
Importing Oil to the Country
The Brazilian legislation establishes mandatory requirements on the import activity depending on which type of good is to be imported. For some goods, even the general procedures are not enough to make the importation possible. Oil is one of these products.
In order to import oil to Brazil the importer will have to acquire a license from the National Agency of Oil, Gas and Fuel– known as ANP. The license will permit the entrance and commercialization of the product in the country.
The license will only be authorized by ANP for importers which:
- are registered with ANP
- have a previous consent to each volume of oil to be imported
Registration with ANP
Registering with ANP is mandatory in order to acquire all the legal documentation needed to obtain the license. The company's documentation and information that must be presented are:
- address of the company and of the company's headquarter
- commercial registry, if it's an individual company
- constitutive act, articles of association and documents of shareholders election – if it is a partnership by shares
- inscription of the constitutive act
- inscription in the CNPJ
- inscription in the taxation contributor system of country, state and municipality
- balance sheet and other financial statements for the last fiscal year and presented in the format established by the law
- clearance certificate of negative bankruptcy issued by the distributor of corporate headquarters.
Requirement for Previous Consent
The previous consent required to the importation of each volume of oil must be accompanied by:
- volume of oil that will be imported
- country of origin
- date of the beginning of the importation process
- potential market to be served
- way of transportation utilized for the importation
- place of delivery in Brazil
- way of transportation utilized to the internalization of oil
- storage place in the country
- technical specifications of the oil to be imported