The Oil Industry in Brazil

By Bruno Stefani, Michael Page Oil & Gas Manager in Brazil

The oil industry in Brazil began in the middle of the 1950’s, with the creation of the state owned oil company Petrobras. The first major discoveries and the developments of the first relevant oil production fields took place in late 1970’s, early 1980’s. At this time, Petrobras began to gain the body, structure and strength that today put the company among the 10 largest International Oil Companies worldwide.

However, the Brazilian oil market started to have international relevance and to became a dynamic market similar to other regions of the world in the late 1990’s with a new legislation which broke the state owned Petrobras’s monopoly and opened the domestic market to international companies to explore and produce independently in the country .

It is important to put out that the 1980’s, known as the “lost decade”, and the 1990’s were decades of very low growth, high inflation and strong macroeconomic adjustment in Brazil. Those factors directly reflected in how the country prepared the labor market for the upcoming years, especially in technical manpower. With the shipping and maritime industries, the oil and gas industry and other capital-intensive industries in difficulty, the graduation of technical professionals and engineers of different expertise also walked slowly. It wasn’t unusual that an entire class of newly graduated engineers in the 1980’s would migrate completely to the speculative financial market.

This addendum helps to justify a very common situation in Brazil today which is the lack of skilled and experienced manpower, and the oil and gas segment is no exception. With the development of the domestic oil market over the 2000’s, the arrival of IOCs, service providers, equipment manufacturers among others incited the dispute of good candidates. This condition leads to an increase in compensation and benefits offered by the companies charged in Brazil (when the compensation is “dollarized” sometimes that professional overcomes peers and superiors who work abroad) and in a turnover above average of other more traditional industries in the country (automotive, pharmaceutical, steel, etc.).

In the 90’s, there was only Petrobras as the company which drilled and produced within Brazilian borders. In the middle of the 2000’s, three dozen of others international companies were doing business in the country. If you consider the last Petrobras’ business plan, the company intends to increase its production of 2 MM bbl / d to 4.2 MM bbl / d by 2020. These numbers help to explain why the fight for talented professional is fierce and the increasing turnover does not soften in the short term, despite the local government efforts in multiplying the technical training courses and engineering graduations in order to keep the industry’s pace.

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