The market for the oil and gas downstream sector in Brazil is expected to grow at a CAGR of more than 5.13% during the forecast period of 2020 – 2025. Factors such as increasing demand for natural gas and increasing demand for refined petroleum products are expected to boost the demand for the Brazil oil and gas downstream market during the forecast period. However, low investment in the country has reduced optimism and therefore decreased the growth in the oil and gas downstream sector.

  • The refineries segment is expected to witness significant demand in the coming years owing to the increasing demand for refined petroleum products in the country.
  • Sizeable crude oil discoveries have been made, in 2006, in west Brazil, that is expected to yield 40 billion barrels of crude oil. The country is, in 2020, is expected to petition the United Nations to extend its exclusive economic zone. This could become an opportunity for the new refineries that are expected to process crude oil.
  • New projects with high capacity are expected to be added in the Brazil downstream market over the forecast period, which, in turn, is expected to boost the market demand.



Key Market Trends

Refineries Segment to Witness Significant Growth

  • In Brazil, the capacity of refineries had increased from 2281 thousand barrels per day (kb/d) in 2015 to 2285 kb/d in 2018. On the other hand, the refinery throughput decreased by 0.5% from 1741 kb/d, in 2017 to 1733 kb/d, in 2018.
  • Refinery utilization rate dropped sharply in Brazil, from an average of 85% in 2008-2016 to 75% in 2017-2019. The output of diesel, Brazil’s most-widely consumed refined product, declined from 900 thousand b/d in mid-2015 to 700 thousand b/d in the first half of 2019. Gasoline production decreased slightly from 460 to 430 thousand b/d over the same period.
  • In April 2019, Petrobras announced its intention to sell refining and associated logistics assets in Brazil. It includes seven refineries and one shale industrialization unit of the company’s 13 refining units, with a total refining capacity of 1.1 million b/d. This amount represents more than half the country’s refining capacity.
  • Petrobras is also adding to the new downstream projects to watch in 2019 with its Abreu e Lima Refinery complex situated in north-eastern Brazil. The refinery is being planned to have a processing capacity of 230,000 barrels per day. The plant is expected to feature with two refining trains with a capacity of 115,000 b/d each. The project also features an 8.5km pipeline which links the refinery to the Suape port complex, connecting to Transpetro’s terminal and other distributors in the area. The first refining train started partial operation in November 2014. Construction of the second train is currently on hold.
  • Oil consumption reduced 0.1% from 136.1 million tons of oil equivalent (Mtoe) in 2017 to 135.9 Mtoe in 2018. The decline in use can be attributed to the economic slowdown in the country.
  • Brazil’s oil and gas downstream industry was expected to grow slightly in the forecast period due to the privatization of refineries and an increase in the demand for refined petroleum products.



Decreasing Oil and Gas Consumption to Restrain the Market

  • The decreasing oil and gas consumption coupled with the decrease in the production of oil and gas has become a concern in the industry. Economic decline is expected to be the primary reason for this trend.
  • Natural gas imported by Brazil decreased by 19.2%, year on year, from 6.8 million tons oil equivalent (Mtoe), in 2015 to 2.9 Mtoe in 2018, primarily due to a decrease in demand in the country, due to economic decline.
  • Natural Gas Production in the country decreased, by 7.4%, from 23.4 Mtoe in 2017 to 21.6 Mtoe, in 2018. Brazilian oil and natural gas production increase is likely to come mainly from pre-salt resources, which still present high Exploration & Production (E&P) costs.
  • Natural gas consumption reduced, by 4.6%, from 32.4 million tons of oil equivalent in 2017 to 30.9 million tons of oil equivalent, in 2018. Decreasing consumption, also, infer a decrease in natural gas usage in the petrochemical industry.
  • Noxis Energy, a Rio de Janerio based company intends to invest 1.3 billion USD, in four new private refineries. The refineries are expected to be installed in S?o Mateus, Barra dos Coqueiros, Bacabeira and Santana increasing the total processing capacity of Brazil by 100,000 b/d. This investment acts as an opportunity for the market in coming years.
  • Therefore, based on the above-mentioned factors, decreasing oil and gas consumption is expected to hinder the market growth in the coming years.



Competitive Landscape

The Brazil oil and gas downstream market is consolidated. Some of the major companies include Petroleo Brasileiro SA, Repsol SA, Refinery de Petr?leo Riograndense SA, Royal Dutch Shell Plc, and Chevron Corporation.

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