Brazil will join OPEC+ but push cutting fossil fuels, says Lula

DUBAI: Brazil will tell oil producers to get ready to “reduce fossil fuels” when it joins OPEC+ next year, President Luiz Inacio Lula da Silva said at the COP28 climate talks on Saturday.

DUBAI: Brazil's President Luiz Inacio Lula da Silva speaks during the High-Level Segment for Heads of State and Government session at the United Nations climate summit in Dubai. – AFP.

Brazil, one of the world’s top 10 producers, which hit a record 3.7 million barrels per day in September, was this week invited to join the 23-member grouping from January.

“I think it’s important for us to participate in OPEC+, because we need to convince the countries that produce oil that they need to prepare to reduce fossil fuels,” Lula said in Dubai.

“And preparing means taking advantage of the money they make from oil and making investments, so that a large continent like Latin America can produce the renewable fuels they need.” The 13-member OPEC headed by Saudi Arabia and its 10 OPEC+ partners led by Russia announced fresh production cuts on Thursday to boost prices.

Lula has a strong environmental record after largely delivering on his promise to curb the destruction of the crucial Amazon rainforest. “Everyone freaked out at the possibility of Brazil joining in OPEC,” he said in a meeting with civil society members at the UN climate talks. “Brazil will not join OPEC, Brazil will join OPEC+. That name is so fancy,” said Lula, according to a transcript of the meeting sent by the COP presidency. The energy transition, and language over phasing “out” or phasing “down” fossil fuels, are key battlegrounds at COP28 in the oil-rich UAE where negotiators will try to agree ways to tackle the climate crisis. OPEC+ slashes oil output further to boost flagging prices.

Saudi Arabia, Russia and other major oil-producing nations on Thursday announced they would further slash production next year in an effort to prop up volatile prices. But prices dropped right after the meeting, with analysts saying the market had expected more from the 13-member Organization of the Petroleum Exporting Countries (OPEC) and its 10 partners. Following the virtual meeting of OPEC+ ministers, Riyadh announced it would extend its voluntary oil production cut of one million barrels per day until March 2024. Moscow said it would slash oil exports by 500,000 barrels a day — up from 300,000 barrels a day so far — until March, following the tough talks.

Following the meeting, prices failed to rally — with benchmark WTI falling 3.0 percent briefly. Amid stuttering global economic growth, analysts had largely expected OPEC+ producers to extend or deepen production cuts into next year to halt the recent slump in prices.

“It’s a bit of a sweet and sour victory for the Saudis,” said Jorge Leon, an analyst with Rystad Energy, adding Riyadh “only managed to convince seven countries to join the voluntary cuts”.

“The market was expecting cuts at least until the end of the first half of the year,” he added. With the OPEC+ meeting postponed from Sunday to Thursday, Saudi Arabia, which has borne the brunt of the supply cuts, had sought to convince African countries to chip in by accepting lower production quotas. But Angola and Nigeria were among those countries reluctant to sign up, seeking to step up production to secure vital foreign currency after they agreed in June to reduce their quotas. — AFP.