Petrobras, the Brazilian oil producer, announced a 15% increase in its five-year investment plan.
Investments
For Petrobras, its investment plan now amounts to $78 billion. However, the company’s strategy, focused on fossil fuel production, will not change. The status quo will remain until the effective end of President Bolsonaro’s term.
Petrobras decided to increase the investments planned between 2023 and 2027 by $10 billion compared to the previous plan. The investment plan calls for increased spending, despite a reduction in the production target for 2023. The production of 100,000 barrels of oil equivalent per day will be maintained.
Increased drilling costs provide part of the explanation for this increase in expenditures. In addition, Petrobras is approving additional short-term drilling for certain projects. Exploration and production will account for 83% of expenditures.
Political uncertainty
In 2027, Petrobras is aiming for a production target of 3.1 million barrels. On the other hand, the company plans to increase investments to reduce carbon emissions. These expenses would thus reach 6% of the total.
In addition, the company is doubling its decarbonization fund to $600 million. While Petrobras has just increased the amount of its investment plan, changes are to be expected with the arrival in power of Lula. Indeed, the new government announced that it would change the company’s strategy.
President-elect Lula, who takes office on January 1, said Petrobras must invest beyond fossil fuels. This change of direction is also visible around the sale of the refinery in Manaus. Lula’s team in charge of energy is asking for the suspension of this sale.
