Brazil's Petrobras Plans to Invest $78 Billion in Next 5 Years

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Written by Amir Richani for Industrial Info Resources (Sugar Land, Texas)--Last week, Brazil's Petrobras (NYSE:PBR) (Rio de Janeiro) released its five-year plan, including US$78 billion in capital expenditures (CAPEX) for 2023 through 2027. The state-owned oil and gas company expects to invest 83% of the capital funds in exploration and production, with offshore pre-salt fields accounting for 64% of new investments. Additionally, the company would invest about US$7.8 billion in its refining operations.

With the new plan, Petrobras hopes to reach oil and gas production of about 2.6 million barrels of oil equivalent per day (boe/d) by the end of 2023, with oil accounting for 2.1 million barrels per day (BBL/d), from which pre-salt fields would generate 74% of the total output. For 2027, however, Petrobras expects oil and gas output of 3.1 million boe/d, with oil accounting for 2.5 million BBL/d, and 78% coming from pre-salt fields.

About US$38 billion in CAPEX would be invested in the Santos Basin over the next five years, where some of Brazil's largest oil fields are located. Some 11 new offshore units are expected to be deployed at Santos, bringing production up to 2.2 million BBL/d.

In the next five years, the Brazilian company plans to deploy 18 more floating production, storage and offloading (FPSO) units across its assets. Most of them will operate in pre-salt fields, while only four will be for post-salt projects. The Buzios field, which currently has four FPSOs in operation with a capacity of 600,000 BBL/d, would have another seven new FPSOs by 2027, with the field reaching a total capacity of about 2 million BBL/d.

Among the controversial segments of the strategic plan is the divestments of Petrobras' refineries. According to the Petrobras presentation, the company would divest from 10 refineries with a capacity of 1.9 million BBL/d in 2022, to five refineries with a total capacity of 1.2 million BBL/d in 2027.

This is key given that Brazilian President-elect Luiz Inacio Lula da Silva has been vocal in his opposition to the privatization of Petrobras and, especially its refineries. This represents a stark reversal of the policy promoted by incumbent Jair Bolsonaro, though he has only about a month left in government.

Lula has yet to appoint his cabinet and essential figures such as the Petrobras president, though the president-elect is expected to review and even halt Petrobras' downstream divestment efforts.

Finally, Petrobras also is focusing on emissions reductions in its operations in the next five years. According to the strategic plan, Petrobras aims to reduce emissions from its energy operations by 30% by 2030. This target could be further strengthened by the incoming Lula administration, which has highlighted its goal of protecting the environment.

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