Petrobras $112 Billion Investment Growth Path to 2012

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Researched by Industrial Info Resources (Sugar Land, Texas) -- In the Strategic Plan for the period 2008 – 2012 announced by Brazil’s state owned oil and gas utility Petrobras is full of references to growth, development and expansion in all its divisions from exploration and production through downstream and distribution, petrochemicals, gas and energy and biofuels. Investments of $112.4 billion are planned for the period, representing an annual average of $22.5 billion of which 87 per cent ($97.4 billion) will go to domestic Brazilian projects and 13 per cent ($15 billion) to overseas activities. The total investment represents an increase of 29% over the annual plan for the previous period 2007 - 2011.

The sectors showing the largest increase in terms of investment will be exploration and production a growth of 32 per cent downstream 35% and petrochemicals 30%. A focus is put on biofuels, which will receive investments of $1.5 billion. The investments in international operations will focus in the main on exploration and production with an emphasis on Latin America, West Africa and the Gulf of Mexico.

New projects see a $13.3 billion growth and $10.9 billion is set against increases costs due to increased market demand for sector equipment and services. Other growth factors are $4.2 billion due to local currency appreciation and other factors such as changes in project scope and changes in the business model.

Production targets are set in the plan for oil and natural gas in Brazil. They will be 3.058 million barrels of oil equivalent per day (BOED) in 2012 and 3.455 boed in 2015. A balance between growth in production and Brazilian refinery capacity is aimed at, with the target for domestic processed crude throughput in 2012 being 2.061 million barrels per day (bpd) with a 90% participation of domestic crude feed. The company’s total estimated output, including overseas operations, has been revised to 3.494 million bpd and the target fro 2015 will be 4.153 million bpd.

$18.2 billion will be invested in different areas in the Brazilian natural gas chain with the objective of developing, leading and guaranteeing the reliable supply of natural gas to the Brazilian market. Petrobras partners in this sector are expected to invest an addit9nal $1 billion over the same period.

Commenting on the plan, which sees the company as one of the largest integrated global energy companies, Petrobras says that the revision of the plan (from the 2007 – 2011 version) adopts a realistic stance, incorporating increases in international oil prices. These increases have generated impacts along the entire production chain, principally with respect to the costs of services, maintenance, equipment and specialized operations for the petroleum sector with across-the-board consequences on lifting (shipping and transport) costs for all the companies in the industry. The growth in the world economy has also had a direct repercussion on several industrial segments that make up the industry’s inputs and basic raw materials supply chain.

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