Petrobras Oil Rush a Bad Bet for Brazil, Report Shows

June 12, 2025 - Brazil’s plans to expand oil and gas production by more than 20% by 2030 pose significant economic risks, with up to 85% of state-owned company Petrobras’ planned extraction unprofitable under a 1.5°C climate scenario, according to new analysis.

The study, released today by the International Institute for Sustainable Development (IISD), World Benchmarking Alliance, and WWF-Brazil, finds that Petrobras’s most high-risk ventures would only turn a profit if global temperatures rise by 2.4°C or more—well beyond internationally agreed climate limits.

The company is responsible for more than half of Brazil’s planned expansion, including some of the most expensive and risky frontier projects. Amid intensifying competition for market share, and given the cost structure of Brazilian oil fields, the majority of Petrobras’s new ventures can only be profitable in a dangerously overheated world, the report warns.

Brazil’s government is set to auction exploration permits on June 17, including 47 offshore blocks in the ecologically sensitive mouth of the Amazon basin.

The report, Brazil at a Crossroads: Rethinking Petrobras Oil and Gas Expansion, shows the following:

• Up to 85% of the oil in Petrobras’ new projects is not economically viable to extract in a scenario compatible with holding global warming to 1.5°C, the international goal. Petrobras’ riskiest ventures would only be profitable in a world where global warming exceeds 2.4°C.
• Petrobras plans to sink USD 97 billion into exploration, production, transportation, and refining of oil and gas throughout 2025–2029. Only 15% of its budget is to decarbonize operations and diversify into clean energy.
• Petrobras lags leading oil and gas companies on climate performance measures. There is significant room for improvement in the carbon intensity of its products, emissions targets, and diversification strategy.

Ricardo Fujii, co-author of the report and energy transition lead at WWF-Brazil, says, “Our analysis shows that oil and gas exploration in the mouth of the Amazon not only poses environmental risks to local populations but also contributes to the loss of biodiversity throughout the Amazon. Petrobras can help prevent this by redirecting its investments in new frontiers toward the energy transition.”

Shifting spending from oil and gas to clean energy would mitigate the risk of stranded assets, help to close Brazil’s investment gap for renewables, and position Petrobras as a leader in the energy transition.

Polling suggests Brazilians want Petrobras to take this leadership. In a 2024 survey by Pollfish for Climainfo, 81% of respondents said Petrobras should shift into renewable energy immediately, against 19% who said it should remain a fossil fuel company.

“Brazil has a real opportunity to lead on climate and future-proof its economy,'' says Joachim Roth, report co-author and Climate Policy Lead at the World Benchmarking Alliance. ''It can do this by redefining Petrobras's mandate, ending new oil and gas licences and aligning national and private sector transition plans through a whole-of-government approach.”

The Brazilian government can influence this path, both through policy actions and its controlling stake in Petrobras. For a stable, secure, and sustainable future, the report recommends that the Brazilian government:

1. Make a roadmap to curb domestic oil and gas expansion. Stop issuing fossil fuel exploration licences and phase out development licences, starting with assets most likely to become stranded under low-carbon pathways. Link national transition planning with credible sectoral and regional pathways and implementation at the company level.
2. Redefine Petrobras’ mandate. Work with Petrobras on a credible, ambitious transition plan in line with climate and sustainable development goals. Adopt a “harvest mode” strategy to maximize cash flows and shareholder returns by avoiding capital expenditure on oil and gas development. Address policy contradictions that hold back Petrobras’s transition through whole-of-government coordination.
3. Shift financial flows from oil and gas to clean energy. Encourage Petrobras to redirect investment into clean energy. Preventing the development of new fields that are still in the exploration phase could help Petrobras avoid between USD 13 and USD 36 billion in stranded asset losses, depending on the speed of the energy transition. Create a level playing field for different energy technologies and companies through fossil fuel subsidy reform and sustainability regulations on financial institutions.

“Brazil’s vast oil and gas expansion plans are unfit for a 1.5°C world,” says Olivier Bois von Kursk, report co-author and policy advisor at IISD. “The majority of Brazil’s new offshore oil fields will be economically unviable if countries align their climate policies with the Paris target. Brazil’s bid for market share can only pay off if other producers shut fields early or governments collectively breach international climate targets. Clean energy is the safest bet.”

Notes for editors

1. Brazil at a Crossroads: Rethinking Petrobras Oil and Gas Expansion
2. Official information on Brazil’s upcoming oil auctions, including timeline, maps of available blocks, registered companies, and draft contracts
3. Brazilians want the country to lead the energy transition - Correio Braziliense (article in Portuguese)

Media contacts

Aia Brnic, communications manager, IISD: [email protected] (English)
Rachel Leung, communications and content lead, WBA: [email protected] (English)
AViV, press office of WWF-Brazil: [email protected] (Portuguese, English)