Petrobras hits record production

Third Equatorial Margin discovery boosts exploration prospects

WHAT Brazil’s state-run oil company achieved a production and export record

WHY New FPSOs are operating, refineries ran at close to full capacity

WHAT NEXT A third Equatorial Margin discovery suggests that the region is ineed similar to the Guyana-Suriname Basin

Brazil's state-controlled oil company Petrobras has reported record quarterly production and exports, while running its refineries close to full capacity, as a third oil discovery in the Equatorial Margin strengthens expectations that the region could become a major new source of crude.

Petrobras (B3: PETR4; NYSE: PBR) produced 3.51mn barrels of oil equivalent per day (boepd) in the third quarter of 2026, an increase of 11.7% year on year and 5.3% from the previous quarter, according to its production and sales report.

The result exceeded analysts' consensus forecast of 3.48mn boepd and surpassed the peak Brazilian oil production level projected in the company's 2026–2030 business plan, Reuters reported.

Crude oil and natural gas liquids production in Brazil rose 12.4% year on year to 2.83mn barrels per day (bpd), driven by increased output from the country's deep-water pre-salt fields, where production climbed 15.9% to 2.45mn bpd.

The strong performance comes as Petrobras seeks to capitalise on elevated international crude prices following the outbreak of war in the Middle East, while increasing domestic refining to limit Brazil's dependence on imported fuels.

Record exports and refinery utilisation

Petrobras exported a record 1.25mn bpd of crude oil and petroleum products during the third quarter, up 20.7% from the corresponding period of 2025, according to the company's figures.

China remained its largest crude export destination, accounting for 40% of shipments, compared with 35% in the previous quarter. The United States increased its share to 12% from 2%, while India's share declined to 8% from 22%.

The figures reflect changing international trade flows amid disruptions to global energy markets.

Petrobras also reported a 9.6% increase in natural gas production to 651,000 boepd.

Meanwhile, the company's refineries have been operating close to their limits.

Refinery utilisation reached 99% in the third quarter and remained at 98% in October, William Franca, Petrobras' director of industrial processes and products, told Reuters.

Franca said the company had maintained high operating rates while complying with safety requirements, with only minor necessary shutdowns during October.

He expects utilisation to remain close to maximum levels through November and December.

Petrobras plans to increase gasoline production in December to meet stronger demand during Brazil's summer, while reducing diesel output following the agricultural planting season, Franca told the agency.

In the first half of 2027, however, refinery utilisation is expected to decline to approximately 96% because of scheduled maintenance and expansion work at the Replan refinery in March and April.

The company produced a record 769,000 bpd of diesel during the third quarter, while domestic fuel sales reached 1.85mn bpd, their highest level since the third quarter of 2021, according to Petrobras' production and sales report.

Total sales of crude oil, petroleum products and natural gas increased 7% year on year to 3.49mn bpd.

New platforms underpin production growth

Much of Petrobras' production growth has come from new floating production, storage and offloading vessels (FPSOs) operating in the Santos Basin, particularly at Búzios, Brazil's largest producing oilfield.

According to the company's third-quarter report, the P-78 and P-79 platforms continued ramping up production at Búzios, where average natural gas exports exceeded 11mn cubic metres per day for the first time.

Elsewhere, the Alexandre de Gusmão platform reached peak production of 190,000 bpd on September 3, while the Sepetiba FPSO achieved 212,000 bpd during September.

The Almirante Tamandaré FPSO established a production record of 263,000 bpd in July.

Further capacity is scheduled to come online in 2027.

Two additional FPSOs, P-80 and P-82, departed Singapore on September 30 and October 18 respectively, bound for Búzios.

Each has a production capacity of 225,000 bpd, potentially adding a combined 450,000 bpd of installed capacity when operational.

The new units are central to Petrobras' strategy of sustaining production growth while compensating for natural declines at mature fields.

Third discovery in Equatorial Margin

Alongside its record operational performance, Petrobras has announced a third oil discovery in the Morpho exploration well in block FZA-M-59, in the Foz do Amazonas Basin off the northern state of Amapá.

The latest oil-bearing interval follows discoveries announced in August and early October, providing further evidence of the area's hydrocarbon potential, Zacks Equity Research reported on November 2.

The well is situated approximately 175 km offshore in water depths of 2,886 metres.

Petrobras chief executive Magda Chambriard said the results had strengthened the company's confidence in the Equatorial Margin, which it regards as one of Brazil's most promising new exploration frontiers.

"Our technical persistence allowed us to make three discoveries in the same well, which makes us even more optimistic about the exploratory potential of the Equatorial Margin," Chambriard said in a company statement.

Petrobras has completed drilling and geological data acquisition at Morpho and will now plug and abandon the exploratory well.

The NS-42 drilling rig is scheduled to move to the Potiguar Basin, off Rio Grande do Norte, to begin drilling the Mãe de Ouro prospect, Zacks reported, citing the company's exploration plans.

Although the discoveries are encouraging, Petrobras has not disclosed estimates of recoverable resources or established whether the accumulations could support commercially viable production.

Further appraisal and technical studies will be required before development decisions can be made, Zacks noted.

The Foz do Amazonas Basin has attracted considerable industry attention because of geological similarities with offshore Guyana, where ExxonMobil has developed substantial oil reserves, Reuters reported.

Neighbouring Suriname has also made major offshore discoveries, strengthening expectations that Brazil's northern Atlantic margin could contain significant untapped resources.

However, exploration in the environmentally sensitive region remains controversial and subject to regulatory scrutiny.

Petrobras plans to drill three additional wells in the area to assess its commercial potential. Chambriard has also said the company has seven wells awaiting drilling licences in the wider region, according to Reuters.

Under its 2026–2030 business plan, Petrobras has allocated approximately $2.5bn to Equatorial Margin exploration, including plans to drill 15 wells over five years, Zacks Equity Research reported.

The investment forms part of the company's longer-term strategy to replace reserves and develop production opportunities beyond its established pre-salt operations.

Offshore support investment

Petrobras is also expanding its offshore support arrangements as exploration and production activity increases.

Offshore vessel operator Oceanity, formerly CMM Offshore, has secured a four-year charter for its fast oil spill response vessel CMM Purity, shipping publication Splash247 reported.

The contract, awarded through subsidiary CMM Offshore Brasil, will provide emergency response support for Petrobras' offshore operations.

Financial terms, the contract's commencement date and the vessel's deployment location were not disclosed.

According to Splash247, the 53-metre vessel, built in 2016, has a service speed of 25 knots and deadweight capacity of 350 tonnes.

The agreement extends a relationship between the companies dating back to 2013, when Petrobras chartered five fast oil spill response vessels.

Oceanity also renewed charters for the CMM Velocity in January 2026 and CMM Celerity in October 2025. In March 2025, it secured a contract to build and operate six hybrid platform supply and oil spill response vessels for Petrobras, Splash247 reported.

Oil boom brings fiscal benefits

Petrobras' operational gains come at a politically significant moment following President Luiz Inácio Lula da Silva's re-election in October.

Higher production and elevated crude prices are generating additional export earnings, tax revenue and royalties, potentially easing some of the pressure on Brazil's public finances.

Brazil collected BRL36.5bn ($6.8bn) in oil royalties during the first half of 2026, according to figures from the Brazilian Petroleum, Gas and Biofuels Institute cited in the supplied industry reporting.

Nevertheless, the country's fiscal outlook remains challenging.

Fitch Ratings expects the general government deficit to reach 8.6% of GDP this year, with public debt approaching 90% of GDP by 2028. Moody's has estimated that Brazil needs a primary fiscal surplus equivalent to 2–3% of GDP to stabilise its debt.

The Brazilian real and the Bovespa stock index fell sharply following Lula's election victory amid investor concerns about government spending and fiscal policy, according to the supplied financial reporting.

For Petrobras, the immediate priorities are maintaining high output from its established pre-salt fields, maximising refining efficiency and assessing whether the Equatorial Margin can become another major producing region.

The company's record third-quarter results demonstrate the strength of its existing production base. Its latest offshore discoveries, meanwhile, offer the prospect of longer-term growth, although the commercial potential of the new frontier remains unproven.