Petrobras To Reduce Mountain Of Debt, To Focus On Deepwater Oil

Board of Brazil’s national oil company, Petrobras has approved an update to its plan for the next five years that is expected to call for the state-run oil and gas com pany to dump its gas distribution and transport business, its fertilizer business, and its LPG and biodiesel business, according to media reports.

Instead, Petrobras will focus on two things in the coming years: shrinking its debt load and deep water—and ultradeep water—oil exploration and production. It hopes to reduce its debt load in part by increasing productivity and lowering costs through digital transformation. The rest will be achieved by unloading unwanted assets.

“The goal now is to be the best energy company adding value for shareholders, with a focus on oil and gas and security, respecting both people and the environment,” Petrobras said.

For gas, Petrobras will focus on selling its own gas only, bowing out of the gas distribution and transport elements altogether.

Brazil’s Chief Executive Officer Roberto Castello Branco said in January after taking office that he would focus on reducing debt, selling assets, and cutting costs. Petrobras has already curbed its debt load to a substantial degree, and at the end of 2018, Petrobras had cut its down by 18% to land just shy of $70 billion. Its debt load in 2015 stood at $100 billion. It achieved this reduction in debt in part by offloading assets, including 90% of Transportadora Associada de Gás, the sale of which was finalized in June.

Prior to its debt-reduction efforts, Petrobras was the world’s most indebted oil company. That torch has since been passed onto Pemex, which carries more than $100 billion in debt.

Another thing Petrobras will not be focusing on over the next five years are renewables, focusing instead on things that will generate returns for its shareholders.

Petrobras has planned to invest almost $70 billion on oil and gas exploration and production through 2023, according to the company’s website.