Petrobras hikes upstream spending in latest plan
About $8bn of the extra $9.6bn of capex in Petrobras' 2019-23 business plan will go towards exploration and production
Brazil's state-controlled Petrobras has boosted upstream capital expenditure (capex) in its $84.1bn investment plan for 2019-23, although the production target for the end of the five-year period remains flat.
The plan represents a 13pc increase in spending from the previous $74.5bn plan for 2018-22 — the biggest year-on-year gain since 2011. Around $8bn of the additional $9.6bn in spending will be directed towards exploration and production. Maintaining or expanding the investment goals set out in the business plan will be a task for incoming chief executive Roberto Castello Branco, the University of Chicago-trained professor appointed by president-elect Jair Bolsonaro to take the reins at the firm on 1 January.
Upstream spending is projected at just under $69bn over the new five-year period, with pre-salt development accounting for around $27bn, a slight increase compared with the previous plan. The Buzios pre-salt field — one of the projects in the Santos basin cluster known as the transfer of rights (TOR) region — leads planned pre-salt spending with $9bn, followed by Mero — the first commercial discovery in the Libra project — with $3.5bn.
Post-salt development spending increases to just over $21.2bn compared with a previous $19.5bn. Of this,Petrobras will spend around $20.5bn to revitalise the mature Campos basin, where natural decline has cut output to its lowest since 2001. And exploration spending rises the most proportionally, up by over 60pc to $10.8bn. Most of that will be spent on exploring dozens of pre and post-salt assets the company picked up in recent upstream licensing rounds.
Domestic oil production is forecast to climb to 2.3mn b/d in 2019, a 9.5pc rise from Petrobras' 2.1mn b/d target for this year. That increase takes into account a planned divestment of producing assets accounting for 100,000 b/d, although the company does not disclose if that comes from domestic or foreign fields.
Petrobras' total output this year is expected to inch up to 2.8mn b/d of oil equivalent (boe/d) in 2019 from 2.7mn boe/d in 2018. And the firm says oil production should grow at an average rate of 5pc/yr over the next five years. Based on the 2.3mn b/d target for 2019, domestic oil flows would reach 2.875mn b/d by 2023, in line with its previous plan for 2022.
Platforms for growth
Petrobras plans to add 13 new domestic production platforms, almost all pre-salt units, by 2023. The P-76 and P-68 platforms earmarked for the Buzios and Lula fields, respectively, will only come on stream in 2019 and not this year as previously targeted. The first unit planned for the Atapu pre-salt field — a TOR asset — has been pushed to 2020 from 2019. A new unit in the Campos basin's Marlim field scheduled for 2021 is now due in 2023, and units for the Itapu field — another TOR asset — and in post-salt Sergipe planned for 2022 have been delayed to 2023.
Petrobras plans to invest $13.9bn on refining, gas and energy projects — stable from the previous plan. The firm has earmarked $1.3bn for refinery projects, mainly a pollution treatment unit and a second 115,000 b/d train at the Abreu e Lima refinery. The two projects could add around 160,000 b/dof new capacity, it says.
The refinery plans also include ultra-low sulphur diesel projects, which could add another 98,000 b/d in capacity. Petrobras still aims to sell 60pc stakes in four refineries, shrinking its share of the domestic refining market to around 60pc from 99pc. This plan was blocked by Brazil's supreme court in July but is expected to advance next year. Part of the new spending plan will be financed by around $27bn in asset sales, bringing the company's divestment target in 2015-23 to around $62bn.
Related news posts
Shell's 1Q profit supported by LNG and refining
Shell's 1Q profit supported by LNG and refining
London, 2 May (Argus) — Shell delivered a better-than-expected profit for the first quarter of 2024, helped by a strong performance from its LNG and oil product businesses. The company reported profit of $7.4bn for January-March, up sharply from an impairment-hit $474mn in the previous three months but down from $8.7bn in the first quarter of 2023. Adjusted for inventory valuation effects and one-off items, Shell's profit came in at $7.7bn, 6pc ahead of the preceding three months and above analysts' estimates of $6.3bn-$6.5bn, although it was 20pc lower than the first quarter of 2023 when gas prices were higher. Shell's oil and gas production increased by 3pc on the quarter in January-March and was broadly flat compared with a year earlier at 2.91mn b/d of oil equivalent (boe/d). For the current quarter, Shell expects production in a range of 2.55mn-2.81mn boe/d, reflecting the effect of scheduled maintenance across its portfolio. The company's Integrated Gas segment delivered a profit of $2.76bn in the first quarter, up from $1.73bn in the previous three months and $2.41bn a year earlier. The segment benefited from increased LNG volumes — 7.58mn t compared to 7.06mn t in the previous quarter and 7.19mn t a year earlier — as well as favourable deferred tax movements and lower operating expenses. For the current quarter, Shell expects to produce 6.8mn-7.4mn t of LNG. In the downstream, the company's Chemicals and Products segment swung to a profit of $1.16bn during the quarter from an impairment-driven loss of $1.83bn in the previous three months, supported by a strong contribution from oil trading operations and higher refining margins driven by greater utilisation of its refineries and global supply disruptions. Shell's refinery throughput increased to 1.43mn b/d in the first quarter from 1.32mn b/d in fourth quarter of last year and 1.41mn b/d in January-March 2023. Shell has maintained its quarterly dividend at $0.344/share. It also said it has completed the $3.5bn programme of share repurchases that it announced at its previous set of results and plans to buy back another $3.5bn of its shares before the company's next quarterly results announcement. The company said it expects its capital spending for the year to be within a $22bn-$25bn range. By Jon Mainwaring Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US Fed signals rates likely to stay high for longer
US Fed signals rates likely to stay high for longer
Houston, 1 May (Argus) — Federal Reserve policymakers signaled they are likely to hold rates higher for longer until they are confident inflation is slowing "sustainably" towards the 2pc target. The Federal Open Market Committee (FOMC) held the federal funds target rate unchanged at a 23-year high of 5.25-5.5pc, for the sixth consecutive meeting. This followed 11 rate increases from March 2022 through July 2023 that amounted to the most aggressive hiking campaign in four decades. "We don't think it would be appropriate to dial back our restrictive policy stance until we've gained greater confidence that inflation is moving down sustainably," Fed chair Jerome Powell told a press conference after the meeting. "It appears it'll take longer to reach the point of confidence that rate cuts will be in scope." In a statement the FOMC cited a lack of further progress towards the committee's 2pc inflation objective in recent months as part of the decision to hold the rate steady. Despite this, the FOMC said the risks to achieving its employment and inflation goals "have moved toward better balance over the past year," shifting prior language that said the goals "are moving into better balance." The decision to keep rates steady was widely expected. CME's FedWatch tool, which tracks fed funds futures trading, had assigned a 99pc probability to the Fed holding rates steady today while giving 58pc odds of rate declines beginning at the 7 November meeting. In March, Fed policymakers had signaled they believed three quarter points cuts were likely this year. Inflation has ticked up lately after falling from four-decade highs in mid-2022. The consumer price index inched back up to an annual 3.5pc in March after reaching a recent low of 3pc in June 2023. The employment cost index edged up in the first quarter to the highest in a year. At the same time, job growth, wages and demand have remained resilient. The Fed also said it would begin slowing the pace of reducing its balance sheet of Treasuries and other notes in June, partly to avoid stress in money markets. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
FERC OK’s Virginia Transco gasline expansion
FERC OK’s Virginia Transco gasline expansion
New York, 1 May (Argus) — The US Federal Energy Regulatory Commission (FERC) today gave Williams the green light to expand natural gas capacity to Virginia by 101mn cf/d (2.9mn m3/d) on its Transco pipeline. The project, called the Commonwealth Energy Connector, involves the construction of 6.3 miles of new pipeline within Transco's existing right-of-way in southeast Virginia, near the border with North Carolina. The project also includes adding horsepower at compressor station 168, west of the new pipeline segment. Williams plans to begin construction this winter and put the project into service by the end of 2025. Environmental advocacy group Sierra Club opposed the project, arguing FERC failed to assess its potential greenhouse gas emissions, rendering its National Environmental Policy Act analysis moot. FERC disagreed, conceding that although the project's final Environmental Impact Statement demonstrated it would contribute to greenhouse gas emissions, the effects of those emissions on the environment could not be measured because FERC lacks the methodology to do so. The US south-Atlantic gas market has become more volatile in recent years as gas and power demand have soared, outpacing pipeline capacity expansions in the region. The combined gas consumption of Virginia and North and South Carolina in 2022 averaged 4.7 Bcf/d, up by 69pc from a decade earlier, US Energy Information Administration data show. Regional gas and power consumption is widely expected to continue climbing through the end of the decade on a massive build-out of data centers , especially in Virginia. By Julian Hast Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Cenovus boosts oil sands output by 4pc in 1Q
Cenovus boosts oil sands output by 4pc in 1Q
Calgary, 1 May (Argus) — Canadian integrated Cenovus Energy increased its oil sands production by 4pc in the first quarter, led by gains at Lloydminster Thermal and Foster Creek heavy crude assets, and the company plans to boost output further to supply the newly opened Trans Mountain Expansion (TMX) pipeline. Cenovus pumped out 613,000 b/d of crude from its oil sands projects in Alberta, up from 588,000 b/d in the same quarter last year, the Calgary-based company reported on Wednesday. This was one of the highest producing quarters for Cenovus' oil sands assets since acquiring Husky in early 2021, second only to the 625,000 b/d produced in the fourth quarter that year. Cenovus has a commitment of about 144,000 b/d on the newly completed 590,000 b/d TMX pipeline, which was placed into service on Wednesday , and the company has plans to push upstream output higher over the next several years across its portfolio to meet its commitment. The pipeline nearly triples the amount of Canadian crude that can reach the Pacific coast without first having to go through the US. First-quarter production from the Lloydminster Thermal segment rose to 114,000 b/d, up from 99,000 b/d a year earlier, because of higher reliability, according to Cenovus. Cenovus' Foster Creek production rose to 196,000 b/d of bitumen, up from 190,000 b/d in first quarter 2023. The company plans to bring another 30,000 b/d online at the steam-assisted gravity drainage (SAGD) asset by the end of 2027 through optimization projects. To the north, Christina Lake's first-quarter bitumen output of 237,000 b/d was steady with previous quarters. The asset is expected to get a significant boost by the end of 2025 when a pipeline connecting the project to output from the neighbouring Narrows Lake asset is completed. The 17 kilometer (11 mile) Narrows Lake tie-back will add 20,000-30,000 b/d of bitumen to Christina Lake, which already ranks as the industry's largest SAGD project. The pipeline is 67pc complete and should be placed into service in early 2025, Cenovus executives said Wednesday on an earnings call. Northeast of Fort McMurray, Alberta, new well pads are planned at Sunrise in 2025, where Cenovus also plans to push production higher by 20,000 b/d. Sunrise produced an average of 49,000 b/d in the first quarter this year, up from 45,000 b/d in the same quarter 2023. Cenovus' output company-wide rose to 801,000 b/d of oil equivalent (boe/d) in the first quarter, up from 779,000 boe/d a year earlier. This includes oil sands, natural gas liquids, natural gas, conventional and offshore assets. Cenovus posted a profit of C$1.2bn ($871mn) in the quarter, up from a C$636mn profit during the same quarter of 2023. By Brett Holmes Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Business intelligence reports
Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.
Learn more