Petrobras may raise investments and sell assets, signals president

June 12, 2019

Petrobras President, Roberto Castello Branco, said the company intends to invest $ 105 billion and raise between $ 30 billion and $ 35 billion with the divestment program over the next five years. The figures give a sign that the company expects to increase asset sales and how much the oil company can raise its current level of investments, against the cash inflow of the amounts it will receive from the Transfer of Rights assignment.

Soon after presenting the figures, during a hearing in the Energy and Mines Commission of the Chamber of Deputies, the state company explained that the current business plan 2019-2023, of US $ 84.1 billion, is maintained. The company, however, stressed that the amount could grow by more than US $ 21 billion, considering the amounts of the Transfer of Rights agreement and what could be redirected to new investments.

In February, the executive had already anticipated that he intended to use the resources of the Transfer of Rights agreement to acquire new assets in the surplus auction of October 28. In all, Petrobras will receive US $ 9 billion from the Federal Government for reviewing the Transfer of Rights assignment contract (which in 2010 gave the company the right to produce 5 billion barrels in the pre-salt as part of the operation that resulted in the increase of the stake of the Union in the company), plus a financial compensation for the investments made in the areas that will be offered in the surplus bidding (volumes exceeding the 5 billion provided for in the original agreement).

This compensation will be paid by the oil companies that win the round and sign a joint venture agreement with Petrobras in the Transfer of Rights fields. Santander estimates that the state-owned company may receive up to US $ 16.4 billion. The real amount to be paid to Petrobras and the date for payment, however, remain open, since the final amount will be negotiated directly with the future members.

Castello Branco took over the oil company in January, a month after the launch of the current business plan, and said he could make “marginal adjustments” in planning. The figures presented yesterday, for example, remain focused on oil and gas investments, which are expected to receive $ 90 billion from the projected $ 105 billion.

More recently, in May, he said he is adjusting the plan gradually. Yesterday, the executive signaled that one of the adjustments should come from the asset sale program, giving new projections for divestitures, above the $ 26.9 billion target set in the 2019-2023 plan. The review comes in line with the speech adopted by the executive since he took over the company promising to intensify the company’s divestment program.

“There is no dismantling [of Petrobras], there is simply a portfolio management”, defended Castello Branco, before the deputies.

Petrobras has been intensifying the sale of assets in recent months. Since April, it has already started six processes – the first deals launched in the Castello Branco management, with three land production centers, Liquigás, Breitener Energética and Compañia MEGA, in Argentina. In addition, it announced the registration of the subsequent offering of shares of BR Distribuidora.

Source: Valor

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