South America’s largest economy, Brazil, ranks as the world’s top 5 oil producer. During 2023, Brazil received an offer to join the OPEC+ price cartel, but it took time for the government of Brasilia to accept membership until early 2025. It marks a significant shift in government strategy, with President Luiz Inácio Lula da Silva seeking to make Brazil the world’s fourth-largest oil producer by the end of the decade. By joining OPEC+, Brazil can access significant strategic resources to help develop its offshore oil fields while contributing to price stabilization strategies and not being affected by production constraints.
Over the past two decades, Brazil has experienced strong production growth, mainly due to major pre-salt oil discoveries in the Santos and Campos basins. The first pre-salt discovery was announced by Brazil’s national oil company Petrobras in 2006. It was Paraty’s discovery in the Santos Basin that later led to the discovery of the giant volcano now called Lula. This light, low-sulfur fuel, with fewer pollutants, has attracted considerable attention from major oil and foreign energy companies. This spurred domestic and international investment, allowing Brazil to emerge as OPEC’s leading oil producer and exporter.
Brazil ended with 16.8 billion barrels of proven reserves at the end of 2024, a 6% increase from the 15.9 billion barrels reported a year ago, government data showed. The vast majority of Brazil’s proven oil reserves, 81% or 13.7 billion barrels, are located offshore pre-salt. Over the past decade, proven reserves have expanded by a remarkable 29%, with significant further growth driven by increased drilling and other upstream activities.
While the hydrocarbon regulator, the National Petroleum, Natural Gas and Biofuels Agency (ANP) has not yet released Brazil’s reserve figures for 2025, there are signs that they are growing again. Petrobras reported a 6% annual increase in proven reserves to 12.1 billion barrels by 2025. These reserves contain 84% by weight of crude oil, the rest consists of natural gas. As Brazil is the largest oil producer, responsible for more than 70% of all petroleum, it indicates that the country’s proven reserves will also increase during 2025.
Brazil’s vast offshore flows into pre-salt oil fields, which drive high hydrocarbon production. Data for January 2026 shows an average of 3.95 million barrels of crude oil and 6.8 billion cubic feet of natural gas were lifted per day that month. This represents a significant increase of 14.6% and 20% respectively from a year ago, indicating the pace at which production is expanding. Combined monthly hydrocarbon production was approximately 5.2 billion barrels of oil equivalent per day, a 15% increase over the same period last year. However, this is below the record of 5.25 million barrels per day for October 2025.
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State-controlled Petrobra, which is 37% owned by the Brazilian government, will invest $109 billion between now and the end of the decade as part of a business plan from 2026 to 2030. Of this total investment, $91 billion will be transferred to projects that are currently being implemented, $69 million will be earmarked for upstream operations, of which 62% or $43 billion will be spent on pre-salt facilities. The remaining $18 billion is earmarked for projects currently under evaluation.
It’s not just Petrobas that is investing in Brazil’s vast offshore oil fields; Foreign drillers are committed to expanding operations. Low break-even costs, which are estimated to be less than $40 per barrel and expected to drop to $28 per barrel, are attracting significant interest from international energy companies. The light, sweet, low-emission oil produced further increases the attractiveness of pre-salt fields to drillers looking to expand operations. You see, pre-salt crude has an API gravity of about 30 degrees with a sulfur content of 0.3% and very few contaminants such as vanadium, which makes it cheap and easy to refine into a high-quality, low-emission oil.
Brazil’s offshore oil industry is one of the world’s lowest carbon emitters, further increasing its attractiveness to foreign energy companies in a world where the fight against warming is accelerating. It is estimated that only about 10 kilograms of carbon are emitted for every barrel that is pumped from Brazil’s pre-salt oil fields. That’s an estimated 88 to 90 kilograms of carbon emitted by Venezuela’s heavy oil production and less than the world average of 18 kilograms of carbon produced per barrel.
As a result, investment volume in Brazil’s pre-salt oil fields is expanding at a steady clip. According to the leading industry body, the Brazilian Institute of Oil, Gas and Biofuels (IBP), 2026 investment will reach $21.3 billion, the highest level ever. This, IBP claims, will support significant production growth with crude oil production expected to rise to 4.2 million barrels per day in 2028, up 6% from January 2026. Natural gas production is expected to increase by 30% from January 2026, to 8.85 billion cubic meters per day.
These numbers equate to a total hydrocarbon production of approximately 6 million barrels per day. This is a significant increase of 5.2 million barrels of oil equivalent in January 2026. Such strong production growth would potentially see Brazil overtake Canada to become the world’s fourth-largest oil producer, which would create a major economic windfall for Brasilia, which could be used to fund further energy development by building infrastructure and other infrastructure. It will generate significant revenue estimated at more than $42 billion for Brasilia, thus giving a major economic windfall to South America’s largest economy.
By Matthew Smith for Oilprice.com
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