Petrobras boosts capex, trims asset sales outlook

Brazil's state-controlled Petrobras has increased upstream capital expenditures and scaled back divestment revenue guidance under a new $68bn investment plan for 2022-26.

The company will spend around $57bn on upstream projects in the five-year period, around $10bn more than it had earmarked in its $55bn 2021-25 plan. Of the expanded upstream outlay, around $38.2bn will be spent on pre-salt development, up from a previous $32.5bn.

The remaining $18.8bn in upstream spending designated for areas outside the pre-salt is almost $5bn more than it was in the prior plan.

Petrobras' oil production is slated to grow from around 2.1mn b/d in 2022 to around 2.6mn b/d in 2026, a modest increase compared with the 2.5mn b/d projected for 2025 under the previous plan. But the production outlook for next year was revised downward from 2.3mn b/d forecast in the previous plan, reflecting the impact of the Covid-19 pandemic and asset sales due to close this year.

Total production, including natural gas, is slated to climb to 3.2mn b/d of oil equivalent (boe/d) in 2026 from around 2.7mn boe/d this year.

The company plans to add 15 production platforms in 2022-26, two more than envisaged under the previous plan. The addition is likely related to new platforms planned for the giant Buzios pre-salt field.

Refinery rethinks

Downstream, the company plans to invest $6.1bn, up from $3.7bn under the previous plan. Around $1bn of that will be spent on completing a second train at the Abreu e Lima refinery (RNEST), which should see capacity increase to 260,000 b/d in 2027 from the current 115,000 b/d. The sales process for the scandal-plagued refinery, one of eight Petrobras was selling, was paused earlier this year after it failed to receive binding offers.

It was not immediately clear if the company intends to retain control of the 208,000 b/d Alberto Pasqualini refinery (REFAP) refinery and the 208,000 b/d Presidente Getulio Vargas refinery (REPAR). Like RNEST, the two refineries had their sales processes suspended because of low bids.

Petrobras plans to spend $1.8bn on marketing and logistics, mostly for required investment at the Santos fuel terminal.

The new capital expenditure plan also features $2.8bn for decarbonization projects, including CO2 separation, methane-detection systems and emissions reduction at refineries, among others.

The $1bn spending planned for the gas and power segment is linked to the completion of the Itaborai gas treatment unit, which will be connected to the 239,000 b/d Duque de Caxias refinery (Reduc) — a project that will soak up around $1.5bn of downstream investment.

The plan will be financed partly from $15bn-$25bn in expected asset sales revenue in 2022-26, down from $25bn-$35bn under the previous plan. The decrease could reflect lower refinery valuations and fewer downstream sales after the company drew lower-than-expected bids.

By Nathan Walters