Brazilian state-led oil producer Petrobras expects domestic crude output to rise 13.0% year on year to 2.3 million b/d in 2019 as fresh wells are connected to floating production units installed over the past year, including including ongoing development of the massive Buzios subsalt field.
Petrobras has started operations on six floating production, storage and offloading vessels over the past 10 months, including two FPSOs in February. Each of the vessels has installed production capacity of at least 150,000 b/d of oil and 6 million cu m/d of gas, according to Petrobras.
Two additional FPSOs will be installed later this year, including a fourth FPSO at the Buzios field and first oil from the Berbigao field. Buzios, where first oil was pumped in April 2018, contains an estimated 3.1 billion barrels of recoverable reserves, making it the second-biggest subsalt field after the Mero field.
"This growth will be made possible by the ramp-up at recently installed platforms as well as the startup of the FPSOs P-77 and P-68," Petrobras said in financial statements filed late Wednesday.
The new production systems build on an unprecedented wave of facilities installed offshore Brazil over the past three years, many of which were ordered or under construction when Petrobras was embroiled in a corruption scandal and oil prices collapsed in 2014-2016. While the new FPSOs have pushed subsalt production higher, accelerating declines in the mature Campos Basin, a series of maintenance shutdowns and sales of stakes in several key oil fields undermined Petrobras' overall production last year.
Petrobras pumped an average of 2.035 million b/d in 2018, down from 2.154 million b/d in 2017. The company also missed its annual production target, which was set at 2.1 million b/d, for the first time in three years. Petrobras' domestic production in the fourth quarter averaged 2.055 million b/d, down 3.9% versus 2.140 million b/d in the fourth quarter of 2017, the company said.
Production, however, could still be affected by ongoing asset sales, with more than 100 fields on the sales block, the company said.
Petrobras plans to sell $26.9 billion worth of assets over the next five years, according to the company's 2019-2023 investment plan. In addition to the oil-field sales, the company's new chief executive Roberto Castello Branco wants to reduce Petrobras' dominant position in the country's refining sector to about 50% from 98% today.
REFINERY OUTPUT DECLINES
Brazil's refining segment continued to suffer from the economic malaise affecting Latin America's largest economy, which expanded 1.2% in 2018, as well as greater competition from biofuel alternatives such as hydrous ethanol and biodiesel. Consumption of diesel and gasoline typically tracks the direction of GDP in Brazil.
The outlook for this year is more positive. Brazil's National Petroleum Agency, or ANP, expects refined product sales to advance year on year in 2019 amid expectations for more robust economic growth of 2.5%.
Petrobras produced 1.764 million b/d of refined products in 2018, down 2.0% from 1.800 million b/d in 2018. In the fourth quarter, refined product output dropped 3.3% year on year to 1.736 million b/d, Petrobras said.
While Petrobras reined in domestic refineries, the company returned to a more aggressive stance in the import market. Petrobras was forced to shoulder a majority of diesel imports in mid-2018, after the government implemented a subsidy on diesel prices to settle a strike by independent truckers. Uncertainties about the subsidy and reimbursements temporarily sidelined many importers.
Petrobras imported 349,000 b/d of crude oil and refined products in 2019, up from 308,000 b/d in 2017, the company said. The year-on-year rise in fourth-quarter imports was even more robust, jumping to 424,000 b/d from 263,000 b/d in the fourth quarter of 2017, the company said.
Reduced domestic crude oil production and lower refinery runs also undercut exports, which fell to 606,000 b/d in 2018 from 669,000 b/d in 2017, Petrobras said. Exports jumped to 640,000 b/d in the fourth quarter, up from 550,000 b/d in the year-ago quarter.
Petrobras remained a net exporter, shipping an average of 257,000 b/d of crude and refined product overseas in 2018 versus 361,000 b/d in 2017, the company said. Fourth-quarter net exports also slipped to 216,000 b/d versus 287,000 b/d in Q4 2017.
Financial results in 2018 were among the strongest ever recorded by the company, including the first annual profit since 2014, Petrobras said. Petrobras registered a full-year net profit of Real 25.8 billion, up from a net loss of Real 446 million in 2017, the company said. Revenue was Real 349.8 billion, up from Real 283.7 billion in 2018, Petrobras said.
