Brazil President Bolsonaro says he wants his country to join OPEC

(Reuters) – Brazilian President Jair Bolsonaro said on Wednesday that he wants his country to join OPEC, a move that would add the most significant new producer to the oil cartel for years.

The comments come ahead of a massive auction of oil rights in Brazil, which is boosting output rapidly. OPEC membership would likely require Brazil to limit oil production, potentially throwing future expansion plans into doubt. The Organisation of the Petroleum Exporting Countries groups top exporter Saudi Arabia and 13 other countries. Since 2017, OPEC has had a deal with several non-member producers, excluding Brazil, to limit supply in an effort to bolster prices.

“I personally would very much like Brazil to become a member of OPEC,” Bolsonaro said at an investment conference in Riyadh, speaking through a translator.

Brazil would be the most significant producer to join OPEC, founded in 1960, for years. The country’s current output would make it OPEC’s third-largest producer, far above that of recent new members such as Congo and Equatorial Guinea. The Brazilian president said he would have to consult his economy and energy ministers to ensure they could follow through if a decision was made. He said Brazil had larger oil reserves than some OPEC members and that when the country was among the top six producers in the world, that would help stabilise the global market.

OPEC delegates said membership talks with Brazil were going on although it had made no formal request to join the group.

Oil output has been rising rapidly in Brazil from offshore fields and production surged by 220,000 barrels per day (bpd) in August to a record 3.1 million bpd, according to the International Energy Agency. That would make Brazil the third-largest OPEC producer after Saudi Arabia and Iraq, pumping the equivalent of more than 10% of current OPEC output. Brazilian authorities have approved 14 companies to participate in the oil bidding round next month, in which total signing bonuses are expected to be the biggest so far, exceeding $25 billion, according to national oil regulator ANP. The so-called transfer-of-rights auction is scheduled for Nov. 6, and concerns a zone of Brazil’s southeastern coast. Companies participating include global oil majors as well as state-run Petroleo Brasileiro SA, or Petrobras.