Oil Becomes Brazil’s Top Export While the Country Imports Gasoline

The year 2024 marked historic milestones for Brazil’s oil market. Last year, Brazil exported more oil than it consumed domestically for the first time in history. The volume of exports was so large that, also for the first time, oil became Brazil’s top export product, surpassing even soybeans.

Sales of crude oil and mineral oils reached US$44.8 billion (almost R$260 billion), according to the Ministry of Development, Industry, Trade and Services (Mdic), a 5.2% increase compared to 2023.

Of Brazil’s total export value last year, 13.3% came from oil sales, while soybeans accounted for 12.7%.

Stakeholders in the oil and gas industry celebrated these figures. For example, Petrobras’ CEO, Magda Chambriard, said that oil’s rise to the top of the export list represents “a significant milestone.”

However, this milestone is tied to historical deficiencies in Brazil’s refining sector. With insufficient plants to process all the oil it extracts, Brazil now exports 52.1% of its oil production. These figures come from the Ineep (Institute for Strategic Studies in Oil, Gas and Biofuels) for 2024.

This crude oil is refined abroad, and part of it even returns to Brazil as fuel. Despite being one of the world’s top ten oil producers, Brazil imports about 10% of the gasoline and up to 25% of the diesel it consumes.

According to Mahatma dos Santos, technical director at Ineep, this contradiction leads to missed opportunities. The main issue is that Brazil remains dependent on foreign markets and prices to supply its domestic market. This model also forgoes job creation and income generation from domestically refining oil.

“All the oil produced in Brazil should be refined here to meet our needs, boost our industry and distribution infrastructure, and generate jobs. The surplus could then be exported as fuel, with greater added value,” Santos summarized in an interview with Brasil de Fato.

Santos acknowledges that exporting crude oil does have short-term benefits: it generates immediate revenue for oil companies, mainly Petrobras, provides royalties for governments, and brings U.S. dollars into the national economy. However, these benefits are short-term and contribute little to the country’s structural development.

“We need to change the primary export model that extracts raw materials and exports them to be industrialized abroad,” he said.

Role of Petrobras

Leandro Lanfredi, director of the Oil Workers’ Union of Rio de Janeiro (Sindipetro-RJ) and activist with the Movement Nossa Classe said Brazil’s focus on primary products, including oil, was particularly emphasized during former President Jair Bolsonaro’s administration and remains significant under President Luiz Inácio Lula da Silva.

“Brazil still exports a lot of crude oil, minerals, and others,” he recalled. “In oil’s case, exploration creates far fewer jobs compared to refining and especially to research.”

Lanfredi highlighted Petrobras’ crucial role in the growth of Brazilian oil exports. Through its efforts, Petrobras discovered the pre-salt oil fields in 2006, almost tripling national production over two decades.

In 2000, Brazil produced 456 million barrels of oil equivalent annually. By 2024, production had reached 1.23 billion barrels — a 173% increase. Today, 80% of Brazil’s oil comes from the pre-salt, demonstrating Petrobras’ importance to the country’s energy sovereignty.

However, Petrobras does not exclusively serve national interests. Although controlled by the government, the company has a majority of private shareholders, many foreign. Quick profits from oil exports are more attractive for these investors than investing in domestic refining.

The lack of investment in refining is also linked to the effects of the Lava Jato operation and political decisions made by past administrations. Lava Jato paralyzed several Petrobras-led refining projects. Under Bolsonaro, Petrobras also sold four refineries.

Eric Gil Dantas, an economist at the Brazilian Institute for Political and Social Studies (Ibeps), noted that Petrobras resumed some projects during Lula’s administration. Investments are underway at the Abreu e Lima Refinery (Rnest) in Pernambuco and the Paulínia Refinery (Replan) in São Paulo. Petrobras claims these would be enough to eliminate Brazil’s refining deficit. Dantas agrees — but more because of changes in fuel consumption patterns in Brazil and globally- than the scale of the investments themselves.

“It’s possible to close the refining gap, given that fleet electrification in Brazil is growing faster than expected,” said Dantas.

Is It Still Worth It?

These changes in consumption patterns raise the question of whether it is still worth investing in refineries.

According to economist Pedro Faria, the answer is not straightforward. Building and expanding refining parks require huge investments that only pay off over the long term.

Given the global energy transition, Faria said such investments may no longer be worthwhile.

“It is estimated that global oil demand will peak around 2040. Investing in refineries when demand for their products is expected to decline is a dilemma,” he pointed out. “They are extremely expensive assets that could become obsolete.”

Marcelo Simas, economist and professor of Energy Geopolitics at the Federal University of Rio de Janeiro (UFRJ) and Fundação Getúlio Vargas (FGV), reinforced doubts about the viability of refining investments. He argued that no private company invests heavily in refining due to future fuel demand forecasts.

“Refining investments are extremely costly, and returns only come after 25 or 30 years,” he said. “A new refinery started today would break even around 2050 or 2055, when we may no longer have the demand for it.”

Dantas, however, noted that diesel demand in Brazil is likely to rise in the coming years, which alone would justify expanding refining capacity. New refineries could also allow Brazil to become a fuel exporter to countries that will continue to rely on diesel for at least the medium term.

“We should revive the ambition from the 2000s when Petrobras planned to become a fuel exporter. This would have a huge impact on Brazil’s economy,” he said, supporting a project also endorsed by Ineep. “It would also help lower global carbon emissions since Brazilian oil wouldn’t need to travel to Asia, nor would American or Middle Eastern fuel need to travel to Brazil.”

Oil for What?

Faria added that Brazil is cementing its role as an oil exporter during a time of global warming and climate crisis. He personally believes the country must first cut its carbon emissions—mainly from deforestation—before limiting resource exploitation. Still, he agrees the issue must be seriously considered.

Lanfredi concluded by pointing out that the way oil revenues are used also needs to be discussed. Even when exported, oil generates income. However, under current fiscal rules, he argues, that money is mostly directed toward paying public debt instead of being invested in public services like healthcare, education, transportation, and housing.

Source: Brasil de Fato 

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