Spotlight: Petrobras’ 2024-28 business plan

Brazilian federal oil giant Petrobras’ new business plan involves investments of US$102bn between 2024 and 2028, 31% more than in the previous five-year period. 

Exploration and production (E&P) remains the core area, receiving 71.5% of the total capex – a proportion significantly lower than in the 2023-27 plan, when it accounted for 83% of the investment. 

Meanwhile, refining capex rose from US$7.8bn to US$17bn, a great leap even considering the incorporation of the former commercialization and logistics area, whose 2023-27 capex was US$1.56bn. 

Another highlight is the gas and low carbon energies area, which will receive US$9bn, with US$5.2bn going to solar and wind power. 

“We're going to make the energy transition gradually and responsibly, without suddenly giving up oil production, which will be needed to meet global demand and finance the energy transition,” CEO Jean Paul Prates told a press conference on Friday.

Source: BNamericas based on Petrobras' data

The 2024-28 capex was split into two categories: “projects being deployed,” with US$91bn – which covers mostly E&P undertakings – and “projects under assessment,” with US$11bn, involving refining and low carbon initiatives. 

E&P

E&P capex totals US$73bn, with around 67% earmarked for the pre-salt.

Also, US$7.5bn is earmarked for exploration, of which US$3.1bn is for the Equatorial Margin, US$3.1bn for the Southeast basins and US$1.3bn for other countries, including Colombia. 

This investment includes the drilling of around 50 wells in areas where the company has exploration rights in acquired blocks.

The production curve considers the entry of 14 FPSOs in the period, 10 of which have been contracted.

The only new FPSO under the 2024-28 plan is the Barracuda/Caratinga, which is in the process of being contracted and is scheduled to start operating in 2028.

The start-up dates of the Búzios 8 (P-79) and the two Sergipe deepwater FPSOs were delayed from 2025 to 2026 and from 2027 to 2028, respectively. 

FPSOs included in Petrobras' plan. Source: Petrobras

REFINING, TRANSPORTATION & COMMERCIALIZATION

The capex forecast for commercialization and logistics, published in the last plan, is now presented in aggregate form as capex for refining, transportation and commercialization.

The new plan foresees an increase in refinery processing capacity of 225,000b/d and S-10 diesel production of more than 290,000b/d by 2029, supported by the entry of major projects such as the second refining train at Rnest, revamps of current units and the implementation of new diesel production units at Revap, Regap, Replan, Rnest and Gaslub.

Some US$800mn will be earmarked for Petrobras’ refining operational efficiency program RefTOP. 

"We're no longer going to sell refineries. On the contrary: we're investing in them so that they each become an industrial park, producing fuels that are generally low carbon," Prates said.

The company plans to invest US$1.5bn in biorefining. These investments will support the growth in production capacity for R5 diesel, with 5% renewable content, at Repar, RPBC, Reduc and Replan. 

It is also planned to install dedicated plants for aviation biokerosene and 100% renewable diesel at RPBC and Gaslub, which will be completed after 2028.

US$2.1bn will be invested in initiatives to remove logistical bottlenecks, with infrastructure and investments in terminals – like the Santos terminal in São Paulo – to optimize operations, expand transportation systems and improve efficiency and resilience. 

Among the projects is the construction of four handy class ships, which will be operated by Transpetro, as well as studies for other vessels.

In the petrochemicals segment, Petrobras plans to act in an integrated manner, maximizing synergies with its refining and oil and gas production facilities. 

Investments in petrochemicals are being studied, considering both projects related to current assets and acquisitions.

Regarding petrochemical unit Braskem, Petrobras' financial director, Sérgio Caetano Leite, said that it was very difficult to sell an asset "so relevant to the strategic direction of the plan, which is petrochemicals." 

Petrobras holds a stake in Braskem and has a right of first refusal to buy the stake put up for sale by Novonor. 

"But Braskem isn't Petrobras' only option for growing in petrochemicals. We also have Gaslub, for example, which could be used to produce resins," said Leite.

In the new plan, Petrobras also marks its return to the fertilizer segment, with plans to resume operations at Ansa (Araucária nitrogen fertilizer unit, in Paraná) and complete work on UFN 3 (fertilizer unit in Três Lagoas, Mato Grosso do Sul).

ALSO READ Why Petrobras is likely to invest in fertilizers and petchem

"We were in China and talked to partners interested in finishing [UFN 3]. That could happen, but we could also finish it on our own and then bring in partners," said Prates.

Ansa, which was mothballed in 2019, is scheduled to resume operations in the second half of 2024. Petrobras is studying the possibility of replacing asphaltic waste with biomass gas as raw material to produce fertilizers at the plant. 

Regarding the fertilizer units in Bahia and Sergipe, leased to Proquigel/Unigel, which has been facing financial difficulties, Petrobras is looking for ways to recover profitability.

One of the arrangements under study is tolling, under which the assignee (Unigel) provides a service to the owner (Petrobras), using the latter's gas to produce urea which would be sold by Unigel on Petrobras’ behalf. 

"Over the course of these six months, which may be extended for another six, we'll look for another solution, which could be to reincorporate the plants, form a joint venture with them, include a third partner or combine them with other projects, such as a hydrogen plant," said Prates.

GAS & ENERGY

One of Petrobras' priorities is to expand natural gas infrastructure and the portfolio. 

Considering the investments in gas production and flow in the E&P segment, the company plans to increase its supply of domestic gas by investing around US$7bn.

In 2024, Rota 3 will come online, including a 21Mm3/d (million cubic meters per day) processing plant and a pipeline with capacity of 18Mm3/d. 

In 2028, the Raia project (BM-C-33, in which Petrobras holds a 30% stake, in partnership with Equinor and Repsol Sinopec) will start operations, bringing an additional 16Mm3/d to the shore. 

And in 2029, the Sergipe deepwater gas pipeline starts operating, with a capacity of 18Mm3/d.

ALSO READ How Brazil will more than double offshore natural gas supply by 2028

LOW CARBON

Petrobras will earmark up to US$11.5bn for low-carbon projects over the next five years, considering transversal investments in the various business segments.

Initiatives and projects to decarbonize operations are covered with a US$3bn investment, as well as the maturing and development of businesses in the low-carbon energy segment, especially biorefining (US$1.5bn), wind and solar (US$5.2bn), and carbon capture, utilization and storage and hydrogen (US$300mn).

On average, low-carbon represents 11% of Petrobras' total investment. The forecast is that low-carbon investment will gradually reach 16% by 2028.

"We want to focus, at first, on mature technologies [onshore wind and solar], with recognized profitability and which are a bridge to the production of green hydrogen," energy transition director Maurício Tolmasquim said during the press conference. 

The company is considering acquisitions of renewable energy projects under development or in operation, mainly in Brazil, but also abroad. 

"Meanwhile, we’re earmarking some resources for research into offshore wind in order to prepare our projects and be ready to enter the market when the regulatory framework is approved," he added.

REACTIONS

According to Carolina Chimenti, a senior analyst at Moody's, Petrobras' new business plan does not affect the company's ratings, since the increase in investments will be mostly financed with internal cash generation and offset by a reduction in dividend payments.

"The company will not increase its financial debt to finance the plan, only by increasing leases related to new FPSOs," Chimenti said in a press release.

Banco do Brasil considered it positive that the new plan kept the focus on E&P, given "the robust agenda of new platforms, which should take total production to 3.2Mboe/d by 2028," a report said.

"It is a more robust plan, which strengthens relevant areas for the company, sets important targets for social, environmental and governance practices, but does not bring any sudden change in direction," it added.

The head of federal oil workers union FUP, Deyvid Bacelar, said that Petrobras is resuming its trajectory as a driver of development in the country, returning to its position as Brazil's largest investor.

“With investments of US$102bn, Petrobras is fulfilling the Lula government's objectives of generating jobs and income for Brazilians, by strengthening the company," he said in a statement.