Brazilian state-led oil giant Petrobras remains tightly focused on
developing its huge offshore oil and gas resources despite rapidly
escalating public concerns over the climate impact from fossil fuels,
its chief executive said Friday.
While most integrated oil majors are under increasing pressure from
investors to future-proof their businesses with a shift to low-carbon or
zero-carbon energy, Petrobras has no immediate plans to invest in
renewable projects, Roberto Castello Branco told investors in London.
"Right now, we don't have the competencies to engage in aggressive
programs to produce renewables. The business of solar and wind power is
completely different from oil," he said while presenting the company's
latest four-year strategic plan.
Petrobras' only recent renewables push was a 2018 deal with Norway's
Equinor to explore joint offshore wind projects. Noting that the
average expected returns from renewable energy projects are well below
those for oil and gas projects, Castello Branco said: "We're not a
charity, we're not going to dispose of money. We have to run profitable
operations. Without cash generation, there is nothing we can do to deal
with climate change."
Petrobras holds proven oil and gas resources of some 12 billion boe,
putting it among the world's top 10 listed oil companies in terms of
total carbon reserves, according to estimates by Carbon Tracker.
But Brazil's oil resources are often seen as being at a low risk of
becoming future stranded assets because of their relatively low
break-even costs to develop, giving them a competitive cost advantage
globally.
NO CARBON COST
The company estimates that its lifting costs from its subsalt fields
will remain below $4/b through to 2024 and sees total development costs
of between $35-45/b for its deepwater offshore reserves.
But Petrobras' upstream head Alberto Pereira de Oliveira said the
company is not currently modeling any carbon cost for developing and
producing its oil resources due to the lack of any global carbon price.
Under the company's current 2020-2014 plan, Petrobras expects oil
and gas output to rise to 3.5 million b/d of oil equivalent in 2014, up
from a target of 2.7 million boe/d this year.
Declining to give volume targets beyond 2024, Petrobras said the
company remains focused on the value of its upstream output, not on
outright volume targets.
"We are not worried about increased production. We are worried about
increased production which adds value ... so that's what you're going
to see going forward," CFO Andrea Marques de Almeida said.
This year, Petrobras jumped from fifth place to become the
third-largest listed oil producer, behind Rosneft and PetroChina, with
oil output hitting around 2.2 million b/d in the third quarter,
according to Norway-based consultants Rystad Energy.
Rystad estimates that Brazil's oil production could be pushed to
average to over 5.5 million b/d, thanks to Petrobras' potential peak
output of almost 3.8 million b/d by 2030.
KEY SUBSALT PROJECTS
The subsalt Buzios field, where Petrobras recently won the right to
produce more oil, will play a key role in the company's upstream
expansion, Pereira de Oliveira said.
Four FPSOs onstream at Buzios are producing about 600,000 b/d of
oil, and the company plans to bring onstream a further seven FPSOs, the
first of which is scheduled for 2024. As result, Buzios could be
producing more than least 1.65 million b/d in 10 years.
The company's 1 million b/d Lula subsalt field, Brazil's biggest oil
and natural gas producer, is expected to keep pumping at that level
well into the next decade as new production wells are drilled, he said.
"We don't see that we're in a decline phase" at Lula, he said. "If
we didn't add new wells, the field would decline by 2-3%/year from
2023/2024, but production will continue at current levels over the next
five years as a result of new wells."
Around three-quarters of the oil production from the Lula field
currently goes to China, Petrobras head of refining Anelise Lara said.
BRASKEM SALE DELAY
Castello Branco also said he wants to sell the company's stake in
petrochemical company Braskem within 12 months, after recent reports
that the sale plans have been delayed.
Brazilian construction conglomerate Odebrecht, which also has a
large stake in Braskem, is in advanced talks to delay a sale for up to
two years, according to a Reuters report this week.
"We'd like to sell within 12 months," Castello Branco said. "Someone
who says they want to sell in 36 months, to me, it means they do not
want to sell anything,"
In June, global petrochemical giant LyondellBasell ended talks to
buy a majority stake in Brazilian petrochemical producer Braskem.
LyondellBasell announced in 2018 it was in talks to acquire
Odebrecht's 38.3% share in Braskem in a deal that market participants
said could reach a value of $11 billion.
