New Petrobras investment plan may be increased

Relative: increase or not, investment will depend on the upcoming auctions, with greater commitment in exploration

The president of Petrobras, Pedro Parente, sees space for the company to increase investments, albeit in a timely manner, in the new version of the company’s business plan. The oil company is preparing a review of the current plan, which provides an investment budget of US $ 74.5 billion between 2018 and 2022, an amount that is practically stable compared to the previous strategic plan.

The company’s business plan is reviewed annually. Parente preaches that the strategic planning of the company is a “dynamic tool”, adjusted whenever “there are reasons for it.”

According to him, the decision whether or not to increase investments will depend on the outcome of the upcoming auctions, which may require more commitments from the company in operation in the coming years. The escalation of oil and dollar prices may also influence the revision of the targets.

In the last four auctions that the company has participated in since last year, the company has recomposed its exploratory portfolio by adding 17 new blocks to its asset portfolio. Petrobras has also expressed interest in taking over the operation of three of the four areas to be offered in the 4th Round of Sharing in June.

“What we are seeing at the moment is that there may be some increase, but it would not be a structural change in the level of investments. It depends a little on the company’s results in the next auctions. it’s nothing structural, “Parente told Valor.

According to the executive, Petrobras expects to announce to the market between the end of July and the beginning of August the goal of deleveraging for 2019. In parallel, the company works on the review of its business plan. According to Parente, the 2019-2023 version should be published by the end of the year.

Petrobras expects to release to the market between the end of July and the beginning of August the target for leverage in 2019

“[The business plan] has become a dynamic tool that we adjust every time we see the reason for it.” We do a permanent follow-up, certainly what is happening with oil and foreign exchange would recommend an update of the strategic vision, “he said.

The company’s strategic plan today works on a premise that the average price of a barrel of oil will be $ 53 this year and $ 58 a barrel by 2019, compared to current levels of $ 80 a barrel (Brent ).

Another point is the goal of reducing leverage, measured by the ratio of net debt / Ebitda (earnings before interest, taxes, depreciation and amortization), from the current 3.52 times to 2.5 times at the end of 2018. This will set the metrics for the next years. The company’s strategy is to further reduce the ratio, to get closer to its global peers. Parente has previously signaled that his intention was to converge the company’s leverage to levels lower than 1.5 times by the end of the current business plan horizon in 2022.

The executive explains, however, that the main driver of the company’s strategic vision review will be to detail the role of natural gas in the company’s business as part of the strategy of transition to a low-carbon economy. The executive sees room for increasing the share of natural gas in the total volume produced. Today about 20% of the volume produced by the company is gas and 80% oil.

“This is a discussion of what would be the appropriate relationship between oil and gas for a company such as Petrobras. It is not a final conclusion, but we have a clear feeling that our participation in gas is low and that probably the appropriate number would be greater than that which exists today, “he says.

Parente has already stated that the oil company could seek to increase its gas production abroad and that the strategic partnership with BP involved just a “very big interest” in the area of ​​natural gas. He added that this could include possible exchanges of assets in this segment.

Leo Pinheiro / Valor

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