Brazil: Petrobras Lowers Five-Year Capex To $75.7B. Most Of It Focused On Pre-Salt

Brazilian national oil company, Petrobras, plans to invest $75.7 billion over the next five years, sell up to $30b worth of assets, boost production, and add to its decarbonisation efforts.

Petrobras said that of the full $75.7 CAPEX sum the 2020-2024 period, 85% would be spent on the E&P segment, mostly on oil-rich pre-salt areas in ultra-deep waters – between 1900 and 2400 meters – with the pre-salt reservoirs themselves located in depths of over 7000 meters in some cases.

“This allocation is in line with our strategic positioning, focusing on E&P assets, especially in the pre-salt, in which Petrobras has a competitive advantage and generates more return on investments,“ Petrobras said.

Worth noting, this five-year plan is a downward revision of the five-year plan released by Petrobras last year, when the company said it would spend $84 billion dollars between 2019 and 2023.

 The divestments under the new plan are expected to be between US$ 20-30 billion for the 2020-2024 period, with the highest concentration of divestments planned in the years 2020 and 2021.

During the five-year period, Petrobras expects to bring online 13 new production systems, all of which are allocated to deepwater and ultra-deepwater projects.

The company also presented a graph in which it showed that oil production is expected to rise, boosted by pre-salt production.

Petrobras’ oil and gas production forecast (Chart by Petrobras)

“For the 2020 production target, we consider a variation of plus or minus 2.5%. The oil production in this year mainly reflects losses in volumes related to the natural decline of mature fields and a higher concentration of production stoppages to increase the integrity of the systems, partially offset by the ramp-up of new platforms. In the long term, the growth trajectory is supported by the new production systems – mostly in the pre-salt, with higher profitability and value generation – and by Campos Basin production stability,” Petrobras said.

Decarbonization commitments

Petrobras’ plan also includes efforts aimed at reduction of its carbon footprint. The company has said that it has already advanced with a series of decarbonization actions in its processes, which involve reducing the flaring of natural gas, reinjection of CO2, and gains in energy efficiency.

“The company maintains its commitment to the decarbonization of processes and products, with a robust action plan in relation to carbon resilience and efficiency,” Petrobras said, revealing its plan which includes ten commitments for the low carbon and sustainability agenda:

1. Zero growth in absolute operating emissions by 2025 (Carbon commitments related to 2015 base. Other commitments based on 2018.)
   2.   Zero routine flarings by 2030
   3.   Re-injection of 40 MM ton CO2 up to 2025 in CCUS projects
   4.   32% reduction in carbon intensity in the E&P segment by 2025
   5.   30%-50% reduction in methane emission intensity in the E&P segment by 2025
   6.   16% reduction in carbon intensity in the refining segment by 2025
   7.   30% reduction in freshwater capture in our operations with a focus on increasing reuse by 2025
   8.   Zero increase in residues generation by 2025
   9.   100% of Petrobras facilities with a biodiversity action plan by 2025
   10.  Maintenance of investments in socio-environmental projects