Brazil’s Petrobras, Latin America’s largest oil producer, will increase capital spending by $68 billion over the next five years, as the state-controlled conglomerate bets on its role as a low-cost hydrocarbon supplier in the region. energy conversion process.
The company, whose full name is Petróleo Brasileiro, announced its spending plan for 2022-2026 this week, with an increase of almost a quarter from its previous budget of $55 billion for the start-up period. from this year.
The largest portion will be spent on oil exploration and production, with the largest portion going to its lucrative “pre-salt” deep-sea reserves. Among the biggest offshore discoveries of this century, the company says its fields are cheaper and have lower carbon emissions per barrel.
“[Our focus is] to win time in this race towards the horizon of 2050, when fossil fuel use could decrease around the world. We want to be an option. As long as there is a need, Petrobras will [there] Joaquim Silva e Luna, chief executive officer, told the Financial Times.
While the overall spending plan remains lower than expected before the start of the coronavirus pandemic, it shows how Petrobras believes its future lies in maximizing output.
Several major international competitors are grappling with pressure from shareholders and campaigners give up new drilling in the fight against climate change.
Wells in pre-salt areas are highly productive, meaning “the mining operation has less than average carbon emissions per barrel. Also, it’s a lighter oil that requires less carbon emissions to process,” said Francisco Monaldi, a Latin American energy policy expert at Rice University’s Baker Institute.
Petrobras is committed to reducing its operating emissions by 25% by the end of the decade. The company points to a commitment of $2.8 billion to decarbonization and other projects, which one critic says is not enough.
“If in today’s world matrix you replace Petrobras’ oil with another oil, it will definitely have more emissions,” said Rodrigo Araujo Alves, chief financial officer.
Comments like oil standard and global stocks tumbled on Friday on fears of a new strain of coronavirus, believed to be behind a surge in Covid-19 infections in southern Africa.
After falling 3.9% on Friday, Petrobras’ São Paulo-listed preferred stock is down 1.5% in 2021, still outperforming the broader Bovespa index, which has fallen 14%.
The recent rise in crude oil prices has helped Petrobras generate growing profits and achieve its goal of bringing total debt below $60 billion ahead of time.
It marks a major milestone in the transformation of the enterprise, in which the state holds about 37% of the shares but has just over half of the voting rights.
Under previous governments, Petrobras was rocked by a massive corruption scandal and pushed to the brink of bankruptcy, after fuel price controls resulted in tens of billions of dollars in losses.
With double-digit inflation Ahead of elections next year, Brazilian President Jair Bolsonaro has targeted the company’s work in adjusting diesel and gasoline prices in line with international market rates.
Silva e Luna insists he will stick to the pricing policy despite political and public pressure, and says corporate governance rules prevent outside interference.
“We understand the political discussion, but we believe there is no room for interference,” he said. “On this point our investors can rest assured.”
A reserve army general with no previous experience in the oil and gas industry, Silva e Luna was appointed in February after predecessor was dismissed of Bolsonaro in a dispute over fuel prices.
Additional reporting by Carolina Ingizza in São Paulo
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