Brazil's low-cost oil will help Petroleo Brasileiro compete in a tough market as it seeks to turn around its business, Pedro Parente, CEO of the state-owned oil giant, said on Wednesday.
Oil majors such as Exxon Mobil, BP, Royal Dutch Shell, Total and Statoil have been snapping up blocks in the Atlantic Ocean off the coast of Brazil that hold crude under thousands of feet of salt. Six blocks in the so-called pre-salt raised about $1.8 billion for the Brazilian government last month, though two blocks went unsold, leaving the country with a weaker haul than it expected.
Parente said it is crucial to be a low-cost producer as a boom in U.S. shale output is upending the oil market and as societies look to lower carbon emissions, in part by reducing their reliance on fossil fuels.
"For this, we count on the pre-salt production because the level of productivity of the fields is very high, so the cost to extract oil from the pre-salt is very low," he told CNBC's "Squawk on the Street" on Wednesday. "So we are talking about extraction costs below $7 per barrel."
"Really, what we have to do to be on the winner's side is to work on the cost and reduce our costs," he said.
Parente said he expects oil prices to remain in the $55 to $65 per barrel range over the medium term. Prices are at roughly half their 2014 highs.