Petrobras projects lower April output

Brazil's state-controlled Petrobras is projecting 2.07mn b/d of domestic oil production in April, down by 69,000 b/d from its last confirmed output level in February.

The company has said that it is shutting in 200,000 b/d of production in response to the oil price crash and coronavirus-hit demand.

In a note this morning, Petrobras reiterated that it will adjust output as needed to ensure the average 2.07mn b/d volume this month.

Petrobras produced around 2.139mn b/d of oil in Brazil in February, according to the latest data from oil regulator ANP.

Petrobras stopped publishing monthly production data in 2019, so it is not clear how much oil it produced in Brazil in March. The company front-loaded maintenance in the first quarter to mitigate the impact of the unfavorable market conditions.

Last week, chief executive Roberto Castello Branco said that despite price pressure exports of crude and low-sulfur marine fuel remained strong and could pick up steam next month, mainly as a result of a resumption of activities in China, the main outlet for Brazilian oil.

Castello Branco confirmed that the company had leased floating storage for some cargoes in need of buyers.

Prior to the upstream cutbacks, Petrobras had been targeting 2.2mn b/d of oil production in 2020, +/-2.5pc. Around 80pc of the company's production is from pre-salt deposits.

Parallel to production cuts, the company also slashed planned 2020 investment spending by around 30pc to $8.5bn. The reduction is likely to slow mid-term growth plans, according to analysts.

New discoveries could also remain untapped for now. In a separate announcement today, Petrobras said it discovered oil at the Natator exploration well in the Sudoeste de Tartaruga Verde block. The Campos basin block was awarded to Petrobras in Brazil's fifth production-sharing round in 2018.

Malaysia's state-owned Petronas holds a 50pc stake in the interconnected portion of the field, Tartaruga Verde.

By Nathan Walters