Brazil’s Management of Oil and Gas: State Centrism Versus Liberalism

Abstract

Brazil is a large energy producer, but is yet to develop a clear and predictable national oil and gas strategy that matches the extent of its reserves and the complexity of operations. This has taken place for a number of reasons, including heavy involvement of the state, shifting political and regulatory powers, and changing exploration and production policy, particularly concerning Brazil’s National Oil Company (NOC), Petrobras. Brazil’s ability to control the NOC has been heavily influenced by numerous presidential administrations which have aligned oil and gas legislation with the politics of the respective government in power. Depending on the type of government, a mix of governance structures present in Brazil’s oil and gas sector has favoured policies ranging from state centrism to market liberalism. As shall be concluded, left-wing governments tend to be more state centric in O&G exploration and to give Petrobras more prominence. On the other hand, neoliberal governments tend to be more market friendly and to lessen Petrobras’ protagonism in such activities. Notwithstanding the differing approaches, the country’s NOC remains a key element of Brazil’s oil and gas policies, irrespective of the degree of state control over it, which has a profound impact on the management side of oil and gas.