Press release

Brazil E&P – Lula leading the way

April 1, 2015
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Authors: Olga Kerimova, Analyst, and Theodora Batoudaki, Analyst, Rystad Energy

Publisher: PESGB Newsletter, April Edition

Although plagued by delays and political uncertainty, Brazil’s E&P industry has seen impressive growth in the past year, which is expected to continue going forward, thanks largely to the game-changing Lula discovery. This article assesses the outlook for the Brazil E&P industry, illustrated by three key drivers: production, exploration success and spending. 

Figure 1 shows the total production for Brazil, split by projects, from 2010 to 2020. Production levels were stable at around 2.3 million boe/d in 2010-2013 and are expected to grow to over 4 million boe/d by 2020. Crude oil is expected to make up around 85% of the 2020 volumes. Production growth in the next decade is primarily a result of growing contributions from major offshore discoveries, including Lula, Roncador, Sapinhoa and Buzios, all Petrobras-operated. Although Petrobras, in its 2014-2018 business management plan, is targeting production of 4.2 million boe/d in 2018, Rystad Energy estimates that this production will be achieved two years later, in 2020. However, even with the recent FPSO delays postponing production from the Buzios field and the later phases of the Lula development, production is expected to grow ~7% over the next five years. The contribution of Lula to Brazil’s production volumes is estimated to rise from 6% in 2014 to 26% in 2020.

Figure 2 shows the discovered volumes for Brazil from 2005 to 2014. By far the best year for exploration in Brazil was 2010, when almost 14 billion boe were discovered (almost all offshore, mostly in the Santos Basin). More than 80% of the 2010 discovered volumes are from the Libra and Buzios discoveries. Other large discoveries include the Lula field (2006 and 2009), as well as Iara, Jupiter and Sapinhoa discoveries (2008). Since 2010, there has been a visible reduction in discovered volumes. However, significant production is expected from the discoveries that have been made in the past ten years, albeit with some uncertainty around the timing of the projects, since most of these (with the exception of Lula, Sapinhoa and the early phases of Buzios) are not yet sanctioned.  

Figure 3 displays the total spending in Brazil over the period 2010-2020. Investments (capex and exploration capex) are projected to drop in 2015 and decline further in 2016, with the Lula, Sapinhoa, Barracuda E Carating and Parque das Baleia projects as the main drivers. Recent production start-ups of fields within these projects (where a large part of the development cost has already been incurred), as well as ongoing corruption allegations (“Operation Car Wash”) and lower oil prices, contribute to decreased investments in 2015 and 2016. From 2017, investments in Brazil are expected to increase gradually, due to growing investments in discoveries, and reach about 40 billion USD in 2020. The Iara, Libra, Lula South and Pao de Acucar discoveries contribute significantly to this growth. The operating costs (opex) are expected to double by 2020. This is primarily because most of the phases of the large projects such as Lula and Sapinhoa started producing in 2013-2014 or are expected to come online in 2016-2018.



Brazil’s production growth from 2014 to 2020 is attributed mostly to Lula, Brazil’s largest field that was discovered in 2006. The drop in oil prices, along with completion of construction for new phases of Brazil’s largest projects, and corruption concerns, are the main determinants of the short-term spending. Investments are estimated to grow post 2016, as new projects, including the Iara and Libra discoveries, are expected to be sanctioned, assuming a recovery in oil prices.


Article Contacts

Contact: Olga Kerimova, Analyst

Phone: +47 24 00 42 00


Contact: Theodora Batoudaki, Analyst

Phone: +47 24 00 42 00


About Rystad Energy

Rystad Energy is an independent oil and gas consulting services and business intelligence data firm offering global databases, strategy consulting and research products.


Rystad Energy’s headquarters are located in Oslo, Norway, with additional research teams in India. Further presence has been established in Norway (Stavanger), the UK (London), USA (New York & Houston), Russia (Moscow), Africa as well as South East Asia.