Daily on Energy: Trump Quietly Makes New Energy Inroads in Brazil

by John Siciliano and Josh Siegel (Washington Examiner) The Trump administration is quietly negotiating an energy partnership with Brazil, the largest economy in South America, to encourage more oil and natural gas production by tapping the expertise of U.S. energy firms, with the ultimate goal of lowering energy prices across the Western Hemisphere.

President Trump and Brazilian President Jair Bolsonaro discussed creating an “energy forum” between the U.S. and Brazil during Tuesday’s talks. A week before that, Energy Secretary Rick Perry held talks with Brazilian energy officials in Houston on creating the forum. Perry said the aim of the new collaboration would be to keep energy prices low across the region.

The new energy collaboration would put an “emphasis on oil and gas and other sources of energy,” Bolsonaro said Tuesday at a joint press conference with Trump.

Brazilian energy officials in Washington ahead of the visit said the country is looking to collaborate on renewables, nuclear, biofuels and ethanol. Nevertheless, attracting oil and gas expertise to assist in its development of major offshore energy resources — some of the largest anywhere in the world — is a priority.

But that would mean U.S. companies partnering with Brazil’s Petrobras, one of the largest national oil companies in the world, according to Brazilian officials. The Energy Information Administration, the federal energy analysis agency, describes the company as “the most indebted company in the world.” However, new laws passed in 2016 offer large cash incentives to foreign companies to drill wells and produce in its offshore areas, which is a very expensive prospect, according to EIA.

Ethanol could also be a major piece of the partnership: The U.S. and Brazil are the two largest ethanol producers in the world. Monte Shaw, the president of the Iowa Renewable Fuels Association, would like to see collaboration between the two countries in promoting ethanol around the world.

“But we’re also competitors for those export markets. So, it’s an interesting balance,” Shaw said in an email to John.

Shaw wants the two countries to cooperate on educating the world on the benefits of ending the use of petroleum-based gasoline additives “that poison the water and air,” and switching to higher amounts of ethanol.

Brazil, unlike the U.S., has a transportation sector that can use high amounts of ethanol to power cars instead of gasoline. The vehicles sold there can use fuel blends of up to 100 percent ethanol, while most of the U.S. is configured to use 10-percent ethanol fuels.

Nevertheless, the Trump administration proposed new rules last week to increase the use of 15-percent ethanol blends, as companies like Ford are making cars that can use the fuel without fear of damaging engine components.

Industry officials say the new Trump rules will encourage more ethanol production, which could spill over into more U.S. ethanol exports to Brazil and elsewhere. Brazilian tariff protections currently limit the amount of U.S. ethanol that arrives in the country. But those tariffs are set to lift in August.

Other biofuel lobbying groups say the talks with Brazil are still in the beginning stages on creating the energy forum, and no agreements have been worked out, yet.

“Seems only that they agreed to establish it, details to be decided later,” Paul Winters, director of communications at the National Biodiesel Board, told John. READ MORE