Brazil's Lula Discusses Possible Exploration Partnership with Mexico's Pemex

Petrobras, Brazil's state-run oil company, may collaborate with Pemex, Mexico's state-run oil company, on a potential exploration partnership in the Gulf of Mexico. The proposed partnership was discussed by Brazilian President Luiz Inacio Lula da Silva and Mexican leader Claudia Sheinbaum.

Key Details

• The partnership would involve exploring for oil at a depth of 2,500 meters in the Gulf of Mexico.
• Petrobras, a specialist in deep-water operations, aims to expand abroad to increase output and replenish its oil and gas reserves.
• Pemex has been seeking private partners to help boost production and revive sagging oil output, which has slumped to half its peak from two decades ago.

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Strategic Oil Reserve

• President Lula suggested that Brazil and Petrobras consider building a strategic oil reserve similar to those maintained by the US, China, and other nations.
• The reserve would hold emergency stockpiles and ease disruptions caused by rising oil prices.

Repurchasing Refinery

• Petrobras plans to repurchase the Mataripe refinery in the state of Bahia, which was sold to Mubadala Capital in 2021.
• The refinery was sold under the previous administration, and President Lula has been critical of the decision.

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Market Impact

• Rising oil prices due to the US war in Iran have put pressure on Petrobras and Brazil's government domestically.
• The proposed partnership and strategic oil reserve could help mitigate the impact of rising oil prices.