Brazil's federal oil giant Petrobras' new business plan includes investing $102 billion between 2024 and 2028, 31% more than it spent over the past five years.
Exploration and production (E&P) remains a core area, accounting for 71.5% of total capital expenditures, a significantly lower percentage than in the 2023-27 plan, where it accounted for 83% of investments.
Meanwhile, refining capital spending rose to $17 billion from $7.8 billion, a big jump even taking into account the consolidation of the former commercialization and logistics division, which had capital spending of $1.56 billion over 2023-27.
Another focus will be on gas and low-carbon energy, with $9 billion being pumped into this sector, of which $5.2 billion will be for solar and wind power.
“We will proceed with the energy transition gradually and responsibly, without suddenly abandoning the oil production needed to meet global demand and finance the energy transition,” Chief Executive Jean-Paul Plathes said at a news conference on Friday.
| period | area | Capital Expenditure (US$ billion) |
| 2024-28 | Oil and Gas Development | 73 |
| 2024-28 | Refining, Transportation and Commercialization | 17 |
| 2024-28 | Gas and low carbon energy | 9 |
| 2024-28 | Enterprise | 3 |
| 2023-27 | Oil and Gas Development | 64.74 |
| 2023-27 | purification | 7.8 |
| 2023-27 | Gas & Energy | 1.56 |
| 2023-27 | Commercialization and logistics | 1.56 |
| 2023-27 | Enterprise | 2.34 |
Source: BNamericas based on Petrobras data
Capital spending for 2024-28 was split into two categories: $91 billion in “projects in development,” primarily covering E&P activities, and $11 billion in “projects under evaluation,” including refining and low-carbon initiatives.
Source: Petrobras
Oil and Gas Development
Total E&P capital expenditures were US$73 billion, of which approximately 67% was in pre-salt formations.
Additionally, $7.5 billion has been allocated for exploration, of which $3.1 billion is for the equatorial region, $3.1 billion for the southeast basin, and $1.3 billion for other countries, including Colombia.
The investment will include drilling approximately 50 wells in areas of the exploration rights the company has acquired.
The production curve assumes the entry of 14 FPSOs over the period, of which 10 are under contract.
The only new FPSO under the 2024-28 plan is Barracuda/Karatinga, which is currently in the contracting process and is due to start up in 2028.
The start-up dates for Buzios-8 (P-79) and the two Sergipe deepwater FPSOs have been postponed from 2025 to 2026 and from 2027 to 2028, respectively.
An FPSO in Petrobras' plans. Source: Petrobras
About 50 FPSO topside modules have been fabricated at Brazilian shipyards, with another 40 modules due to be built locally in 2024, Petrobras engineering director Carlos Travasos said.
Petrobras expects the new production unit to produce 3.2 Mboe/d (million barrels of oil equivalent) over five years, significantly higher than the 3.1 Mboe/d previously planned.
Pre-salt production will account for 79% of the company's total production at the end of the five-year period, in line with its 2023-27 plan, which forecast 78%.
Refining, Transportation and Commercialization
The capital expenditure forecasts for commercialization and logistics released in previous plans are presented in an aggregated form as refining, transportation and commercialization capital expenditures.
The new plan is expected to increase refinery capacity to 225,000 b/d and S-10 diesel production to more than 290,000 b/d by 2029, underpinned by the start of major projects such as a second refining line at Lunest, the renovation of current units, and the installation of new diesel production units at Revap, Rigap, Lipran, Lunest and Gaslab.
About $800 million will be allocated to Petrobras' refining efficiency program, RefTOP.
“We're no longer looking to sell refineries, but rather we are investing in them to become industrial parks and produce generally lower carbon fuels,” Prattes said.
The company plans to invest US$1.5 billion in bio-refineries, which will support the expansion of R5 diesel production capacity with 5% renewable content at Repar, RPBC, Reduc and Replan.
There are also plans to set up dedicated plants for aviation bio-kerosene and 100% renewable diesel at RPBC and Gaslab, which are scheduled to be completed after 2028.
The $2.1 billion will be invested in efforts to eliminate logistics bottlenecks through infrastructure and investments in terminals such as the Santos Terminal in São Paulo to optimize operations, expand the transportation system and improve efficiency and resilience.
Among the projects are the construction of four Handy-class vessels to be operated by Transpetro, as well as research into other vessels.
In the petrochemicals sector, Petrobras plans to integrate its activities, maximizing synergies between its refining facilities and its oil and gas production facilities.
Petrochemical investments are being considered considering both projects and acquisitions related to current assets.
Petrobras' finance director Sergio Caetano Leite said of petrochemical unit Braskem it would be very difficult to sell assets that are “very linked to the strategic direction of our petrochemical plan.”
Petrobras owns shares in Braskem and has a right of first preference to buy any shares put up for sale by Novonor.
“But Braskem is not Petrobras' only option for growth in the petrochemicals sector. It also has gas labs that can be used to produce resins, for example,” Leite said.
Under the new plan, Petrobras will also return to the fertilizer sector, restarting operations at ANSA (the Araucaria nitrogen fertilizer unit in Paraná state) and completing work at UFN 3 (the fertilizer unit in Tres Lagoas, Mato Grosso do Sul state).
See also Why Petrobras is Likely to Invest in Fertilizers and Petrochemicals
“We are in China and have spoken to partners who are interested in completing [UFN 3]”That could happen, but we could also just do it on our own and then bring in a partner,” Plattes said.
Ansa, which was mothballed in 2019, is scheduled to restart in late 2024. Petrobras is exploring the possibility of replacing asphalt waste with biomass gas as a feedstock for producing fertilizer at the plant.
Petrobras is looking for ways to restore profitability to fertilizer plants in the states of Bahia and Sergipe that it leases to financially struggling Prokigel/Unigel.
One of the contracts under consideration is a tolling, whereby a transferee (Unigel) will provide a service to an owner (Petrobras) to use the owner's gas to produce urea, which Unigel will then sell on behalf of Petrobras.
“For the next six months, which could be extended for another six months, we will be exploring alternative solutions, which could be to reintegrate the plant, to create a joint venture with the plant, to include a third partner or to combine it with another project, such as a hydrogen plant,” Prattes said.
Gas and Energy
One of Petrobras' priorities is to expand its natural gas infrastructure and portfolio.
The company plans to invest around US$7 billion to increase domestic gas supplies, considering investments in gas production and distribution in the E&P division.
Rota 3, which will include a 21 Mm3/d (million cubic metres per day) treatment plant and a pipeline with 18 Mm3/d capacity, is due to be operational in 2024.
In 2028, the Raia project (BM-C-33, in which Petrobras holds a 30% stake in partnership with Equinor and Repsol Sinopec) is expected to come on stream, delivering an additional 16 million cubic meters per day to onshore.
And in 2029, the Sergipe deep-sea gas pipeline, with a capacity of 18 Mm3/day, will come on stream.
See also Brazil plans to more than double offshore natural gas supplies by 2028
Low carbon
Petrobras plans to allocate up to US$11.5 billion to low-carbon projects over the next five years, taking into account investments across its various business segments.
US$3 billion has been invested in initiatives and projects to decarbonise operations, as well as in the maturation and development of operations in the low-carbon energy sector, particularly in bio-refining (US$1.5 billion), wind and solar (US$5.2 billion) and carbon capture, utilization, storage and hydrogen (US$300 million).
On average, low-carbon represents 11% of Petrobras' total investments. Low-carbon investments are projected to gradually reach 16% by 2028.
“We want to focus on mature technologies first. [onshore wind and solar]”This is a bridge to the production of green hydrogen, which is proven profitable,” Energy Transition Director Mauricio Tolmasquin said at a press conference.
The company is looking to acquire renewable energy projects under development or operation, primarily in Brazil, but also abroad.
“Meanwhile, we have allocated some funds for offshore wind research so that we can prepare projects and enter the market when the regulatory framework is approved,” he added.
reaction
Petrobras' new business plans won't affect the company's ratings because increased investment will be funded mostly through internal cash generation and offset by a cut in the dividend, said Carolina Chimenti, a senior analyst at Moody's.
“The company does not intend to increase financial debt to fund the plan, only new FPSO-related leases,” Chimenti said in a press release.
In its report, Banco do Brasil said it was positive that the new plan remained focused on E&P, given “strong plans for new platforms to increase total production to 3.2 million barrels of oil equivalent by 2028.”
“This is a stronger plan that strengthens relevant areas for companies and sets important targets on social, environmental and governance practices, but it does not represent a sudden change in direction,” he added.
David Basellar, head of the federal oil workers' union FUP, said Petrobras had returned to its position as Brazil's largest investor and was back on track as a driver of the country's development.
“With $102 billion in investments, Petrobras is achieving the Lula administration's goal of strengthening the company and generating jobs and income for Brazilians,” he said in a statement.
