OIL & GAS

The oil & gas sector in BRICS nations represents both strategic opportunity and elevated geopolitical and operational risk. These countries are either major producers (Russia, Brazil) or fast-growing energy consumers (China, India, South Africa), offering vast upstream and downstream potential. However, foreign corporations often face state-dominated market structures, shifting national energy policies, and restrictive local content requirements. Political influence over pricing, subsidies, and licensing processes can significantly distort investment viability. Environmental regulations are uneven, and foreign firms may find themselves navigating conflicting mandates between national development goals and global sustainability expectations.

Over the past five years, several critical events have defined the risk landscape. Russia’s invasion of Ukraine in 2022 led to the mass exit of international energy firms like BP, Shell, and ExxonMobil, which incurred multi-billion-dollar losses amid asset seizures and sanctions. In contrast, Brazil’s pre-salt offshore reserves continued attracting investment, with companies like TotalEnergies and Equinor expanding production under relatively stable regulatory conditions—though political shifts under Lula have reintroduced state intervention concerns. In India, ongoing reforms in gas pricing and infrastructure have opened up midstream opportunities, yet subsidy dependencies and bureaucratic inertia remain obstacles. China, while open to joint ventures, keeps strategic control through its national oil giants, making operational independence challenging for foreign players. South Africa, facing energy insecurity, has shown interest in offshore gas, but environmental opposition and licensing delays have hindered momentum.

The sector is also under pressure from the global energy transition. BRICS governments are balancing fossil fuel development with climate commitments, often resulting in inconsistent policy signals. International firms must not only manage traditional risks like corruption, security, and operational safety, but also anticipate legal and financial exposure tied to ESG compliance, stranded asset risks, and carbon regulation. Robust local engagement, scenario planning, and flexible project structuring are critical to managing volatility and protecting long-term investment.