Brazil needs more auctions, fewer licensing hurdles to boost oil reserves, say experts

Brazil drilled just 19 exploratory wells in 2025, well below the levels needed to replenish its oil reserves, according to industry executives and experts, who called for more auctions and fewer environmental licensing hurdles, Valor reported.

The figure marks an improvement on 2024's record low of 10 wells, according to data from the National Agency of Petroleum, Natural Gas and Biofuels (ANP), but remains far below the peak of 150 wells drilled in 2011.

Activity has declined steadily since then, falling to 122 wells the following year, 65 in 2013, and no more than 20 a year since 2016.

"It was a precipitous fall," said Cristiano Pinto da Costa, president of Shell Brazil, who steps down at the end of the month, citing the Morpho well, in the Foz do Amazonas Basin, which took 12 years to secure a licence before drilling could begin.

Telmo Ghiorzi, president of the Brazilian Association of Petroleum Exploration and Production Companies, said Brazil needed to encourage new investment to avoid depleting its reserves, contrasting the pace of exploration with Norway's.

Pinto da Costa said licensing processes, even in mature basins such as Campos and Santos, remained slower than necessary.

"Shell will always want a higher bar, because a higher bar means more safety for the industry. But we see room to accelerate, to shorten licensing timelines," he said.

Claudio Nunes, exploration and production director at the Brazilian Petroleum, Gas and Biofuels Institute (IBP), said the pre-salt's maturity made new drilling more urgent, pointing to frontier areas such as the Pelotas Basin and the Equatorial Margin.

ANP director-general Artur Watt said the agency would offer 500 blocks this year, most under permanent concession, alongside 23 blocks under production-sharing contracts, to keep the sector competitive.

This comes as Brazil collected BRL36.5bn ($7.2bn) in oil royalties in the first half of the year, with a quarter of the total driven by a surge in crude prices linked to conflicts in the Middle East, IBP said, Valor reported.

Higher Brent prices added BRL9.6bn, or 26.3%, to royalty revenue, IBP said, with the benchmark averaging $92.56 a barrel during the period, well above the International Energy Agency's start-of-year forecast of $57.50.

At the same time, the value of Brazilian oil exports fell 28.3% in May from April after a 12% tax on overseas crude sales took effect, with volumes dropping to 45mn barrels from 62.8mn.

IBP plans to challenge the tax in court, arguing it generates more losses than gains. IBP President Roberto Ardenghy said revenue from higher prices and production alone would have sufficed to fund government fuel subsidies.

Finance Ministry data show the tax raised about BRL1bn between March and May, against BRL9.6bn in additional royalties, of which the federal government received BRL3bn, states BRL2.7bn and municipalities BRL3.9bn.

"Brazilian legislation is well designed and already provides for the government to capture gains from higher oil prices. We do not need to add an export tax," Ardenghy said.